Israel’s offensive in the Gaza Strip has helped push up oil prices close to their highest in three weeks amid increasing fears for crude supplies from the Middle East which produces about a third of the world’s oil. The Gaza violence does not directly threaten any oil production, but traders said there was underlying concern it could affect other countries in the Middle East.
Oil prices have risen by a third since the end of December when Israel launched its Gaza offensive. US light crude hit a high of $48.71 a barrel before a rally in the US dollar encouraged profit-taking by investors. The market is also looking for further signs of production cuts from OPEC after Libya and Abu Dhabi both joined leading producer Saudi Arabia, in vowing to reduce output. The producer’s cartel is trying to stop prices falling further. They’re down over $100 a barrel drop since last July. A strong start to the new year for stock markets and a decision by the US Energy Department to start rebuilding its reserves of crude also helped boost oil prices.