The situation in the Middle East has heated up again. The oil market responded instantly. Crude prices skyrocketed, driven by the news of Iranian supreme leader Ali Khamenei's order to strike Israel.
As a result, US West Texas Intermediate crude surpassed $78 per barrel after rising by 4.3% in the previous trading session alone. Brent crude also showed strong gains, closing at around $81 per barrel.
Recent data showed that US crude oil inventories fell by 3.4 million barrels in the week ended July 26, marking the fifth consecutive decline and the longest falling streak since January 2022.
Adding to the market volatility, on July 31, Hamas leader Ismail Haniyeh was reportedly assassinated in an Israeli strike in Tehran after attending the inauguration of new Iranian President Masoud Pezeshkian. In retaliation, Ali Khamenei ordered a direct attack on Israel.
So the situation in the Middle East remains tense, with no peace talks on the agenda. This in turn increases the risk of a wider conflict in the region, pushing oil prices higher.
