(Bloomberg) – Oil prices rose as the Middle East prepared for an escalation of conflict following an Israeli attack on Hezbollah targets in southern Lebanon.
Global benchmark Brent crude rose above $79 a barrel, while U.S. West Texas Intermediate crude climbed to nearly $75. Israel sent more than 100 warplanes to take out thousands of Hezbollah rocket launchers on Sunday morning, and the militant group responded by firing more than 200 projectiles that caused limited damage, according to Israeli officials.
Hezbollah, which is backed by Iran and classified as a terrorist organization by the United States, said it had “ended” its military operation for today but would continue hostilities with Israel until the country agreed to a ceasefire in the Gaza Strip.
In a sign of relative calm after the exchange of fire, negotiations began as planned in Cairo on Sunday, which are intended to bring about a pause in the fighting between Israel and the Palestinian militia Hamas. Israel also relaxed security restrictions for its population on Sunday evening, after previously declaring a state of emergency and closing the country’s main airport for several hours.
Monday’s rise reinforced oil prices’ return to a year-on-year gain, helped by political risks and expectations of an imminent rate cut in the U.S. Fed Chairman Jerome Powell gave his most decisive signal yet that his mission to fight inflation was accomplished in his speech in Jackson Hole, Wyoming, on Friday, when he said: “It’s time to adjust policy.”
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