Israel Pushes Oil Prices to Highest Levels in the Last Month

Oil prices rose on Monday above $105 per barrel, reaching the highest level in nearly a month, after an Israeli airstrike on Syrian military facilities over the weekend drew investors’ attention to supply risks from the Middle East.

The price of a barrel of crude oil in London increased by 53 cents to $104.72, briefly touching $105.49, the highest level since April 11. In the U.S. market, the barrel rose by 67 cents to $96.28.

Israeli aircraft struck Syrian targets near Damascus in an airstrike on Sunday, and Western and Israeli officials reported that it was an attack on a shipment of missiles from Iran to Lebanese Hezbollah. Iran denied this and called for the region to unite against Israel.

“The strengthening geopolitical concerns have increased risk premiums for oil, and there are fears that the Israeli attack will lead to the involvement of others in the Syrian conflict. This is driving further increases in oil prices, after they had already strengthened on Friday based on a solid employment report in the U.S.,” said Victor Shum, a consultant at IHS in Singapore.

A report released on Friday showed that U.S. employment rose in April more than expected, and the unemployment rate fell to its lowest level in four years at 7.5 percent. This alleviated concerns about a sharp slowdown in the world’s largest economy.

However, higher oil price growth is being hindered by the latest macroeconomic indicators from China and the Eurozone.

New activity data from the Eurozone released on Monday shows that the region could fall into an even deeper recession this quarter.

Additionally, the official Chinese newspaper China Securities Journal reported on Monday that Chinese export growth is expected to slow in the second quarter to around 10 percent, down from 18 percent in the first quarter.

“The fundamentals in the crude oil market remain strained, with supply once again disappointing. The key risk remains weak demand,” analysts at Morgan Stanley assess.

Meanwhile, OPEC announced on its website that the price of its reference basket of oil was $101.47 on Friday, which means it was $2.5 higher than the day before.