Oil Prices Rise Amid Concerns of Escalating Middle East Conflict and US Storm, Reports Reuters

KUALA LUMPUR (Reuters) – Oil prices saw an increase on Tuesday amid rising concerns that the escalating conflict between Israel and Hezbollah could disrupt supply in the crucial Middle Eastern region. Additionally, a tropical storm is expected to affect output in the U.S., the largest crude producer in the world, later this week.

Futures for November delivery climbed by 21 cents, or 0.3%, reaching $74.11 a barrel. Meanwhile, November futures rose by 24 cents, or 0.3%, to $70.61.

Both contracts ended lower on Monday as investors focused on demand uncertainties following disappointing business activity reports from the euro zone and ongoing worries about fuel consumption in China.

The Israeli military reported that it conducted airstrikes against Hezbollah positions in Lebanon on Monday. This led to claims from Lebanese authorities of 492 fatalities and a large-scale displacement of civilians, marking one of the deadliest days in decades for the country.

The tensions escalated after an explosion involving thousands of devices used by Hezbollah members last week, which many blamed on Israel. Since the outbreak of conflict between Hamas in Gaza and Israel on October 7, Hezbollah has engaged in armed exchanges with Israeli forces along the border.

Analysts from ANZ bank noted that the oil market is increasingly worried about the possibility that these rising tensions could draw Iran, an OPEC oil producer, into further conflict.

Traders are also monitoring the weather closely. The U.S. Gulf Coast faces the threat of a hurricane later in the week as a system in the Atlantic strengthens.

U.S. oil producers are evacuating staff from Gulf of Mexico oil platforms in anticipation of this storm, as forecasters warn it could become the second major hurricane to impact offshore oil production fields in just two weeks. The U.S. National Hurricane Center indicated that a potential tropical storm located southeast of Cuba is expected to evolve into a hurricane on Wednesday and may strengthen as it moves into the eastern Gulf of Mexico over the next 72 hours.