Oil rises on risk of broadening Mideast conflict

Oil prices rose in early Asian trading, extending strong gains in the previous session after the killing of a Hamas leader in Iran raised the threat of a wider Middle East conflict and signs of strong oil demand in the US.

Global benchmark Brent crude futures rose 67 cents, or 0.8%, to $81.51 per barrel by 0007 GMT, while US West Texas Intermediate crude futures rose 69 cents, or 0.9%, to $78.60 per barrel.

The most active contracts on both benchmarks jumped about 4% in the previous session.

Hamas leader Ismail Haniyeh was assassinated in the Iranian capital, Tehran on Wednesday, less than 24 hours after Lebanon-based Hezbollah’s most senior military commander was killed in an Israeli strike in the capital, Beirut.

The killings fuelled concern that the 10-month-old war in Gaza between Israel and Hamas was turning into a wider Middle East war, which could potentially lead to disruptions in oil supply from the region.

“We fear the region is at the brink of all-out war,” Japan’s deputy UN representative Shino Mitsuko said on Wednesday as the UN security council called for stepped-up diplomatic efforts.

Also pushing up oil prices was a set of data releases from the US, the world’s top oil consumer, and a weaker dollar.