SINGAPORE, AP – Crude oil prices rose Monday as escalating fighting between Israel and militants in Lebanon created more geopolitical uncertainty in a market already jittery over volatility in oil-producing countries.
Analysts said the Mideas violence was driving oil prices higher though it had no direct effect on oil supplies because it added more nervousness to a market already placed on edge by strong global demand and a tight supply cushion.
“Oil prices are higher because the conflict between Israel and Lebanon worsened over the weekend, and though that obviously doesn’t have any direct impact on physical oil supply, people are having trouble seeing where this all ends,” said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney.
Light, sweet crude for August delivery gained 55 cents to $77.58 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore.
The contract reached an intraday record of $78.40 a barrel Friday before settling at an all-time closing high of $77.03.
September Brent crude futures on London’s ICE Futures exchange gained 41 cents to $77.99 a barrel.
Gasoline futures rose 1.01 cents to $2.335 a gallon Monday while heating oil prices added 1.4 cents to $2.09 a gallon. Natural gas prices fell 16.7 cents to $6.180 per 1,000 cubic feet.
Fighting between Israel and militants in Lebanon escalated over the weekend, raising fears of a possible full-blown war.
Israeli jets killed a total of 17 people and wounded at least 53 others in airstrikes across Lebanon on Monday, the latest in a surge of reprisals after Hezbollah rockets slammed into new targets deep inside Israel.
Both Israel and Hezbollah signaled over the weekend that their attacks would only intensify in an already brutal fight that has killed at least 174 in Lebanon and 23 in Israel.
Hezbollah on Sunday launched missile attacks on the Israeli city of Haifa, after attacking an Israeli warship Friday night. Israel has said one of the missiles in the Haifa attack came from Syria and said Iran had helped Hezbollah fire a sophisticated radar-guided missile at the Israeli warship.
British Prime Minister Tony Blair and U.N. Secretary-General Kofi Annan called Monday for the deployment of international forces to stop the bombardment of Israel from southern Lebanon.
Their comments came a day after world leaders forged a unified response at their G-8 summit to the crisis in the Middle East, blaming Hezbollah and Hamas for the escalating violence and recognizing Israel’s right to defend itself — although they called on the Jewish state to show restraint.
The fighting comes amid persistent oil market anxieties about the West’s nuclear standoff with Iran, threats of supply disruptions in Nigeria and the Gulf of Mexico hurricane season. Last year, hurricanes Katrina and Rita devastated oil and natural gas production in the Gulf of Mexico.