Oil prices rose again, driven by increasing anxiety in the Middle East

TOKYO: Oil prices rose in early trading Friday (April 12) amid rising tensions in the Middle East, with Iran vowing to retaliate against an alleged Israeli airstrike on its embassy in Syria, which risks disrupting supplies from the oil-producing region.

Brent crude futures rose 34 cents, or 0.38 percent, to $90.08 a barrel, while US West Texas Intermediate crude futures rose 44 cents, or 0.51 percent, to $85.45, by 0033 GMT.

The gains erased some of the losses from the previous session, which was dominated by concerns about stubborn US inflation that dampened hopes of an interest rate cut in early June.

Suspected Israeli warplanes bombed the Iranian embassy in Damascus in an April 1 attack in which Iran has vowed revenge, raising tensions in a region already strained by the Gaza war.

Israel has not said it was responsible but Iran’s supreme leader, Ayatollah Ali Khamenei, said on Wednesday that Israel “must be punished and they are the ones who must bear the consequences” for the attack.

The US expects an Iranian attack on Israel to occur, but it would not be large enough to draw Washington into the war, according to a US official. Iranian sources said that Tehran had signaled a response aimed at avoiding a major escalation.

Israel is continuing its war in Gaza but is also preparing for scenarios in other areas, Prime Minister Benjamin Netanyahu said on Thursday.

“Geopolitical risks remain high,” ANZ Research said in a note, adding that oil prices had jumped nearly 19 percent also supported by improving economic conditions and supply cuts by the Organization of the Petroleum Exporting Countries and its allies, together called OPEC+.

In Europe, where the labor market is starting to weaken and growth is stagnating, central bankers kept policy rates unchanged on Thursday but signaled they remained on track to cut rates in June.

“The European Central Bank’s (ECB) decision to keep its policy rate unchanged… was expected, but the accompanying statement opened the door to near-term monetary easing,” S&P Global Market Intelligence said in a note.

But in the US, Federal Reserve officials on Thursday signaled no rush to cut interest rates, as high US inflation remains a concern.