Oil prices jump more than 2% as Middle East tensions escalate

Reuters - Oil prices climbed more than 2% on Wednesday on rising concerns that Middle East tensions could escalate, potentially disrupting crude output from the region, following Iran's biggest ever military blow against Israel.

Brent futures leapt $1.63, or 2.2%, to $75.19 a barrel, while U.S. West Texas Intermediate (WTI) crude spiked $1.70, or 2.4%, to $71.53 at 0755 GMT. WTI had earlier risen more than $2.

Both crude benchmarks on Tuesday surged more than 5% before closing around 2.5% higher.

Iran said early on Wednesday that its missile attack on Israel was over barring further provocation, while Israel and the U.S. promised to strike back against Tehran as fears of a wider war intensified.

"This could include damaging or obliterating Iran's oil facilities," said Tamas Varga of oil broker PVM.

Tehran said any Israeli response to the attack, which Israel said involved more than 180 ballistic missiles, would be met with "vast destruction".

Varga noted Iran's or its allies' retaliation could strike Saudi oil facilities like in 2019 or see the closure of the Strait of Hormuz. "Any of these events would irretrievably send oil prices considerably higher," he said.

In another escalation of the conflict, the Israeli military on Wednesday sent regular infantry and armoured units to join ground operations in southern Lebanon against Iran-backed Hezbollah.

The United Nations Security Council scheduled a meeting about the Middle East for Wednesday, and the European Union called for an immediate ceasefire.

Iran's oil output rose to a six-year high of 3.7 million barrels per day (bpd) in August, ANZ analysts said.