LONDON: Oil prices rose on Friday after a Malaysia Airlines plane crashed in the conflict zone of easter Ukraine, and Israel pursued a ground offensive into Gaza.
Brent North Sea for delivery in September rose 36 cents to $108.25 a barrel in London midday deals.
New York’s benchmark West Texas Intermediate for August gained 24 cents to $103.43 per barrel from Thursday’s closing level.
Speculation that flight MH17 with 298 people aboard was shot down by pro-Moscow separatist rebels in Ukraine has fuelled concerns of an escalation of the conflict. Sentiment was clouded also by intensified US sanctions on Russia, CMC Markets in Singapore said.
“Oil prices rose as fears over intensified sanctions on Russia risked a tit-for-tat situation which may affect supplies from the (world’s) second largest crude oil producer,” it said in a commentary.
Ukraine is also a major conduit for Russian gas exports to Europe.
Ukraine’s government and western leaders have accused Russia of supporting the separatist rebellion in the country’s east, but Moscow has denied the allegations.
Investors are also keeping a wary eye on events in Gaza after Israel began a ground operation late on Thursday, the tenth day of an offensive to stamp out rocket fire from the Hamas-run enclave.
The assault follows a brief humanitarian truce and an urgent appeal by Washington and the UN that Israel redouble its efforts to avoid harm to civilians.
“Geo-political risks took a grip on the financial markets… with (the) shooting down of the Malaysian Airlines passenger jet near the Ukraine-Russia border and Israel continuing its offensive in Gaza,” United Overseas Bank said.
It said in a market commentary that oil prices spiked “on renewed concerns about threats to global supplies” as the Middle East is home to the world’s major oil producing nations.
“Energy prices will soar, together with gold, safe haven currencies like the yen, and sovereign bonds like Treasuries and German bunds,” added Phillip Futures.