Oil prices went up by more than $3 per barrel in Asia on Monday because of fighting between Israel and the Palestinian group Hamas.
This fighting has caused uncertainty in the Middle East and worries about oil supplies.
Brent crude, a type of oil, went up by $3.10 to $87.68 a barrel, while U.S. West Texas Intermediate crude was at $86.05 a barrel, up by $3.26.
Both kinds of oil had gone up by more than $4 per barrel earlier but then went down a bit.
Analysts from ANZ Bank said, “Increasing geopolitical risk in the Middle East should support oil prices … higher volatility can be expected.”
The increase in oil prices came after a week of falling prices, the biggest drop since March.
Brent had gone down by about 11%, and WTI had gone down by more than 8%.
People were worried about high-interest rates and how they might affect the world’s demand for oil.
Hamas attacked Israel on Saturday, causing the worst violence between the two in decades.
Hundreds of Israelis died, and Israel launched air attacks on Gaza, killing more than 400 people.
Saul Kavonic, an energy analyst, said, “The risk premium on oil is rising due to the prospect of a wider conflagration that could spread to nearby major oil-producing nations such as Iran and Saudi Arabia.”
This violence might stop the U.S. from helping Saudi Arabia and Israel become friends.
Saudi Arabia might have agreed to produce more oil next year as part of the deal with Israel.
This would have helped because the oil supply has been limited for many months by Saudi Arabia and Russia.
If Saudi Arabia and Israel become friends, it could also cause problems for Saudi Arabia’s relationship with Iran.
Iran has supported the attacks by Hamas.
People are worried that if Iran gets involved in the conflict, it could affect the supply of oil. Saul Kavonic said, “If the conflict envelopes Iran… up to 3% of global oil supply is at risk.
And if a wider conflict eventuates that ends up impacting transit through the Strait of Hormuz, around 20% of global oil supply could be held hostage.”
