Brent crude rose above $86 on Thursday as fears of all-out war between Israel and Lebanon took center stage, with Iran-backed Iraqi militias vowing to strike US interests in the Middle East if Israel launches a full-scale campaign against Hezbollah in southern Lebanon.
An overnight Israeli strike in southern Lebanon injured more than 20 people after hitting a residential building in the city center of Nabatieh, with Lebanese news agencies reporting that it did not There were no deaths and the injuries were not critical.
German Foreign Minister Annalena Baerbock urged restraint on Wednesday, warning against any “erroneous calculations” that could trigger all-out war between Israel and Hezbollah, saying that “Every rocket crossing the Blue Line between Lebanon and Israel increases the danger that a miscalculation could trigger open war,” The National reported. Earlier this week, the leader of Asaib Ahl al-Haq (League of the Righteous), a powerful Iranian-backed militia in Iraq, was placed on the U.S. list of foreign terrorist organizations , declared on public television that American interests in the region would be targeted if Israel strikes.
Last week, Israeli Prime Minister Benjamin Netanyahu said that as operations in Gaza were gradually winding down, the focus would now turn to Lebanon and Hezbollah, according to CNN.
Markets are concerned about the risk that a war between Israel and Lebanon could quickly turn into a sizable proxy conflict in several locations with Iran, potentially threatening supplies future in oil.
Those concerns intensified Thursday after disappointing U.S. inventory data from the previous day dampened optimism about demand. On Wednesday, the U.S. Energy Information Administration reported a 3.6 million barrel increase in oil inventories, compared with a 2.9 million barrel increase expected by analysts polled by Reuters. Gasoline inventories also rose much more than analysts had expected.
As of 11:08 a.m. Eastern on Thursday, Brent crude was up 1.01% at $86.11 and West Texas Intermediate (WTI) was up 0.99% at $81. 70 dollars.
By Tom Kool for Oilprice.com
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