Gaza violence affects oil prices

30 December 2008

Tensions in the Middle East have led to a spike in oil prices, despite the continuing economic downturn across the world.

London Brent rose by $1.39 to $38.70 a barrel, while US crude has gone up by $1.22 to $37.89 a barrel.

This is because of the recent attacks by Israeli forces in Gaza, as this has led to concerns about possible supply problems.

Commenting on the development, Olivier Jakob of Petromatrix stated: "Geopolitics had disappeared from the oil scene for the last couple of months but will regain some price premium with the latest Israeli attack in Gaza."

Peter McGuire, managing director of Commodity Warrants Australia, added that the current violence is causing "major concerns" across the markets.

He described the turmoil in Gaza as a "terrible situation".

Global economic problems, including the recession in the eurozone, had contributed to a recent slump in oil prices, partly because of reduced global demand.