Oil prices jumped in Asian trade on Tuesday as Israel’s strikes in the Gazan city of Rafah in the latest escalation of its war with Hamas added uncertainty over a ceasefire deal with the Palestinian militant group.
Global benchmark Brent crude oil futures expiring in July rose 0.19% to $83.49 per barrel, while June contract US West Texas Intermediate (WTI) crude futures climbed 0.19% to $78.63 per barrel.
Prices continued to bounce back from their lowest levels reached the week earlier amid weaker oil demand and the easing of tight supplies. However, markets saw some geopolitical risk premium return after the Israeli military attacked Rafah on the weekend.
Israel’s Attack on Rafah Adds to Uncertainty Over Truce
Hamas on Monday accepted a new Gaza ceasefire and hostage release proposal from Qatari and Egyptian mediators.
Terms of the brokered settlement included a weeks-long postponement of the fight and freeing dozens of Israeli hostages held by the group.
The proposed deal received a different response from Israel, with Israeli Prime Minister Benjamin Netanyahu saying the proposal that Hamas agreed to did not meet their standard requirements, although they plan to continue talks for a truce.
Still, Israel earlier proceeded to launch a series of air and ground assaults on Rafah after it reportedly requested the people to leave parts of the city, where over a million Palestinians have taken refuge.
A Hamas official said the move was a “dangerous escalation” to the war, which has now been ongoing for seven months.
Oil prices have found support from the two parties hitting an impasse on a ceasefire deal. Investors have grown concerned over a potential supply disruption in the key oil-producing region of the Middle East should the fight between Israel and Hamas spread to other countries in the region.
Despite Israel carrying on with negotiations, its recent attack on Rafah has maintained doubts over a settlement moving forward, resulting in higher risk premiums in oil markets.
