Crude oil prices: Brent gains on Gaza tensions, Saudi increasing selling rate

Global crude benchmark Brent gained during the early trading hours of Tuesday, as crude oil prices returned to the upward trajectory following the escalation of tensions in Gaza, and Saudi Arabia’s decision to boost its selling rate.

Brent futures for June delivery were trading at $83.57 per barrel, up 0.29% as against the last closing price. The U.S. West Texas Intermediate (WTI) for June delivery was hovering around $78.7, higher by 0.31%.

At India’s Multi Commodity Exchange (MCX), May crude oil futures opened at ₹6,583 per barrel, up 0.63% as against the previous day’s close of ₹6,542. Crude futures for June delivery also climbed by 0.63% to trade at ₹6,572 a barrel in the opening hour.

Also Read: HPCL, BPCL, Indian Oil rose after Brent crude price slipped to two-month low last week

Why crude oil prices are rising again

• Crude oil prices witnessed a rally in April, as fears of a direct military confrontation between Israel and Iran escalated. The rates had ballooned to as high as $92 per barrel early last month, but receded shortly as both countries hinted at not further climbing the escalation ladder.

• However, the prices seem to be under pressure again as Israel has upped its offensive in Rafah, the southern enclave in Gaza where most of the war-torn region’s civilians are currently based. Analysts fear that a ground offensive in Rafah could stoke a migrant crisis, and may lead to a wider regional conflict.

• The operation may draw a response from Iran and its proxy network, which includes Lebanon’s Hezbollah and Yemen’s Houthi militants, analysts pointed out. A jump in attacks on commercial vehicles by the Houthis may further hit commercial trade through the Red Sea, they pointed out.

• Markets were jittery after Israel rejected the peace deal mediated by Qatar and Egypt, even as Palestinian militant group Hamas accepted it. The rejection has raised speculations of a ground offensive in Rafah.

• Apart from the Middle East tensions, the decision taken by Saudi Arabia to increase its selling rate has also boosted the commodity’s price. Riyadh on May 6 said it was raising the rate of Arab Light crude by 90 cents to $2.90 a barrel as against the Oman-Dubai benchmark.