Oil prices tick up as Israel-Lebanon conflict escalates

Brent’s price moved higher following a major escalation of conflict in the Middle East, as Iran-aligned Hezbollah armed group launched airstrikes over northern Israel.

PHOTO: Flags of Israel and Lebanon. Getty Images

The attack comes amid retaliation from the Lebanon-based militants after prominent leaders of the group including Ibrahim Aqil and Fuad Shukr were “eliminated” last week, the Israel Defense Forces (IDF) said on the social media platform X (formerly Twitter).

Concerns over oil supply disruptions from the Middle East surged as the IDF and Hezbollah armed group entered a direct conflict, raising fears of regional instability, oil market analysts said. Several locations in northern Israel are “being targeted by Hezbollah’s rockets,” the IDF claimed.

“The fighting between Israel and the Iranian-backed regional militia has raised concerns that the conflict will drag in Iran, a major oil producer in the region,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Last week, the news about hand-held pager devices used by the Hezbollah militants detonating across southern Lebanon raised a major security threat. The IDF said it “will continue operating to dismantle and degrade Hezbollah's capabilities and terrorist infrastructure,” in a clear indication of a broader regional conflict.

Oil market analysts have reacted to the latest development and expressed concerns over potential supply disruptions in neighbouring regions.

“A sharp escalation in attacks by Israel and the Hezbollah militants across the Israel-Lebanon border over the weekend might also be injecting some knee-jerk risk premium into [Brent] crude,” VANDA Insights’ founder and analyst Vandana Hari remarked.

By Aparupa Mazumder

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