Oil Rises on Geopolitical Risk After Killing of Hamas Leader Ismail Haniyeh

Oil prices rose on Wednesday amid concerns that the killing of Hamas leader Ismail Haniyeh in Tehran could trigger a wider regional conflict.

Brent, the benchmark for two thirds of the world’s oil, was up 1.39 per cent at $79.72 per barrel at 8.39am UAE time. West Texas Intermediate, the gauge that tracks US crude, climbed by 1.63 per cent to $75.95 a barrel.

Prices rose from a seven-week low, the first in four trading sessions after the Hamas political chief and one of his bodyguards were killed in their residence in Tehran, Iran's Islamic Revolutionary Guard Corps said.

“The cause and dimensions of this incident are being investigated and the results will be announced later,” Iran state news agency Irna said, citing an IRGC statement.

Hamas, whose October 7 attack in Israel triggered the war in Gaza, also confirmed the death of its leader, blaming Israel for the strike in the Iranian capital. The attack comes after an Israeli strike on Beirut's southern suburbs on Tuesday night. The area is a stronghold of the Lebanese armed group and political party Hezbollah. The strike was carried out by a drone that fired three missiles, the Lebanese state-run news agency reported.

Hezbollah has denied responsibility for the attack on Majdal Shams in the occupied Syrian territory on Saturday that killed 12. However, Israel insisted the group was behind the strike and promised to respond strongly.

The escalation in recent days and the strike in Tehran on Hamas's leader has stoked geopolitical tensions further, with the risk of an Israel-Gaza war turning into a regional conflict.

Oil prices are bouncing back from the three straight weeks of declines on demand concerns. Brent tumbled by 4.1 per cent over the prior three days.

The rise is also supported by the American Petroleum Institute’s report pointing to a 4.5 million barrel fall in crude inventories last week. If confirmed by official figures later on Wednesday, it would mark the longest streak of inventory declines since January 2022, Bloomberg reported.

Despite the rise on Wednesday, crude prices are still set for the largest monthly drop this year, dragged lower by a weak demand outlook in China, the world’s second-largest economy and the biggest oil importer in the world.