Brent crude rose to almost $110 a barrel today as escalating violence between Israel and the Palestinians fuelled concerns about supplies from the Middle East.
Investors fear the Israeli-Palestinian conflict may drawn in other countries and possibly threaten supply from the region, which supplies more than a third of the world's crude.
Brent crude for January delivery gained 88 cents to $109.83 a barrel earloy this morning. US oil also rose $1 to $87.92.
"If the situation starts to deteriorate further where we see other oil producers getting involved and backing the rhetoric with action, then you could see an extension on the risk premium," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
"The market will definitely be seeking a clearer assessment of the current situation." An Israeli missile killed at least 11 Palestinian civilians, including four children, in Gaza yesterday, the single deadliest incident in five days of Palestinian rocket attacks on Israel and Israeli air strikes on the Gaza Strip.
Pressure for a ceasefire is rising. Egypt has taken the lead in trying to broker an agreement and Israeli media said a delegation from Israel had been to Cairo for talks on ending the fighting, although a government spokesman declined to comment.
The Israeli military said 544 rockets fired from Gaza had hit Israel since Wednesday, killing civilians and wounding dozens. It has also been giving signs of a possible ground invasion into Gaza.
Reuters
