Oil and gas prices rose amid fears of an escalation in fighting between Israel and Hamas.
Brent crude, the global benchmark, rose as much as 4 percent to $89.94 a barrel, its highest price since Hamas militants attacked Israel last week, before closing at $89.71 in London.
Iranian Foreign Minister Hossein Amirabdollahian discussed Israel’s conflict with Hamas on Friday with the head of the powerful Tehran-backed Lebanese armed group Hezbollah.
“The market is worried because we don’t know what this means,” said Phil Flynn, oil analyst at Price Futures Group.
Due to the unstable situation in the Middle East, oil prices are expected to reach $100 per barrel, Iranian Oil Minister Javad Ouji said, as quoted by the ministry’s Shana news agency.
Although the conflict has not yet impacted oil flows, analysts and market watchers are closely monitoring developments.
The Organization of the Petroleum Exporting Countries (OPEC) this week maintained its forecast for global oil demand growth, citing signs of a strong global economy and expecting further demand growth from China, the world’s largest oil importer.
The International Energy Agency’s report on the global oil market said: “A sharp escalation in geopolitical risks in the Middle East, a region that accounts for more than a third of global seaborne oil trade, is roiling markets. While there has been no immediate impact on physical supply, markets will remain tight as the crisis unfolds.”
Natural gas costs are also rising, with UK wholesale gas prices reaching almost 135 cents per therm, the highest since mid-February. Wholesale prices are linked to rising energy bills as most of the UK’s electricity is produced by gas-fired power stations.
UK gas demand is expected to rise as the weather gets colder and central heating comes on.
Prices began to rise after fighting led to the closure of a gas field off the coast of Israel. Production was stopped last week at the request of Israeli energy officials.
Supplies were also interrupted due to the discovery of a leak in the Balticconnector pipeline, which transports gas between Estonia and Finland.
Seismologists from Scandinavia and the Baltic countries said they detected blast waves from Sunday’s gas pipeline rupture, but there was not enough data to determine whether they were explosive.
Finnish Prime Minister Petteri Orpo said the damage may have been caused deliberately, raising concerns about the security of energy supplies in the Nordic region, where most of Britain’s gas comes from.
Downing Street said Rishi Sunak and Norwegian Prime Minister Jonas Store discussed the need to strengthen security around undersea infrastructure.
Jess Ralston, from the Energy and Climate Intelligence Unit, said: “This is a reminder that without a switch to renewables and electric heat pumps, the UK will be increasingly exposed to this kind of gas price volatility.”
Source: I News
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