Oil Surges as Israel Rejects Gaza Ceasefire Proposal

Oil prices advanced on Thursday after Israeli Prime Minister Benjamin Netanyahu vowed to intensify the Gaza offensive to wipe out Hamas.

The US West Texas Intermediate (WTI) crude futures for March delivery lifted 3.20% to $76.22 per barrel on February 08. However, analysts expect a 0.18% decline to $76.08 a barrel in the coming trading session due to short-term profit-taking.

US Secretary of State Antony Blinken spent the week on a diplomatic tour of Gaza and surrounding areas. Additionally, he joined the effort for a humanitarian pause in hostilities in exchange for Hamas releasing all its remaining hostages.

On Tuesday, Hamas reiterated it would free the hostages if Israel declared a comprehensive and complete end to all offensives.

The militant group’s willingness to a cease-fire alleviated fears of potential oil supply disruptions.

Blinken and other mediators met Netanyahu on Wednesday to discuss Hamas’ proposal for a permanent end to the Israel-Hamas war. Netanyahu insisted that Israel can only offer a temporary truce in return for the hostages.

After negotiations broke down, Netanyahu swore to expand its attacks to nearby Hamas positions until Israel achieved a total victory.

Meanwhile, the Energy Information Administration (EIA) reported a build of 5.52 million barrels in oil inventories in the week ending February 02. The data exceeded the market consensus of a 1.70-million-barrel accumulation.

Gaza Developments Trigger Oil Supply Fears

Israel’s decision to continue its pursuit against Hamas coincided with the US killing a senior commander of the militant group Kata’ib Hezbollah. The drone strike was a part of America’s reprisal for attacks on US troops that resulted in fatalities.

As a result, economists feared a broader escalation of the conflict in the Middle East. This week, engagements occurred in the territories of Iran, Iraq, and Syria, with Israel planning attacks on Hamas bases bordering Egypt.

Geopolitical experts cautioned that territories affected by US offensives may retaliate by covertly sending support to Houthi militants. The move will expand the militia’s attacks on maritime vessels in the Red Sea, which could lead more oil tankers to reroute.