Brent crude rose above $114 per barrel to a more than three-month high on Monday on renewed fears of supply disruption as Israel’s latest comments on stopping Iran from proceeding with a disputed nuclear programme stoked tension in the region.
Prime Minister, Benjamin Netanyahu said on Sunday that most threats to Israel’s security were “dwarfed” by the prospect of Iran obtaining nuclear weaponry.
Those comments overshadowed recent forecasts of a further slowdown in oil demand growth due to a weak economic outlook in the United States and Europe.
Brent crude rose $1.02 to $113.97 a barrel by 0331 GMT, gaining for six out of the past seven sessions. It hit $114.28 earlier in the session — its highest since May 4.
U.S. oil rose 73 cents to $93.60 after settling 49 cents lower at $92.87.
“We are seeing prices rise despite weak growth outlook numbers on Friday,” said Ben Le Brun, a Sydney-based market analyst at OptionsXpress.
“The Israeli comments, what you see in Israeli media, is a concern. A major concern.”
The debate in Israel whether to go to war against Iran over its nuclear programme intensified during the weekend, worrying oil investors who see it as defying appeals by U.S. President Barack Obama to allow more time for international diplomacy.
“We will continue to see tensions in the Middle East underpin oil prices,” Le Brun said.
Oil may trade in a tight, $2-a-barrel range unless the situation in the Middle East worsens or till the time there is more clarity on steps central banks may take to bolster growth, Le Brun said.
A revival in commodity demand could be expected once more policy measures are announced, he said.