Crude oil prices jumped 4% on Monday as the escalation of conflict between Israel and Hamas entered the third day. Israel declared a state of war last night as the country faced continuous attacks from Palestinian fighters in several areas across the southern part of Israel.
The attack came after Israeli Prime Minister Benjamin Netanyahu threatened to launch a ground invasion of Gaza, saying that he will turn the besieged Palestinian enclave into a deserted island.
The war could lead to a tight supply in the oil market. However, some analysts expected this to be temporary, saying that there should be a sustained reduction in oil supply or transport for the oil prices to remain higher.
In the morning on Monday, the international benchmark Brent crude rose $3.26 or 3.85% to $87.84 a barrel. Meanwhile, the U.S. West Texas Intermediate gained $3.40 or 4.11% to $86.19 a barrel.
Israel and Iran are not major players in the oil market, but the conflict in the region could disrupt global oil supply.
Iran is currently producing 3.2 million of oil output, and any link between the country and Hamas could be a downside risk to the market. It has been reported that Iran has been helping Hamas plot an attack on Israel over several weeks.