Oil prices rose to more than $1 as tensions in the Middle East rose

Oil prices rose on fears of supply disruptions in the Middle East
Iran has fired more than 180 missiles at Israel, saying the attack is over
Israel and the US have vowed to retaliate against Tehran
The OPEC+ panel will meet later on Wednesday

SINGAPORE, Oct 2 (Reuters) – Oil prices rose against the dollar on Wednesday on worries that tensions in the Middle East could escalate, potentially disrupting crude output from the region following Iran's biggest military strike against Israel.

Brent futures jumped $1.08, or 1.47%, to $74.64 a barrel, while US West Texas Intermediate (WTI) crude was up $1.12, or 1.6%, at $70.95 by 0650 GMT.

During Tuesday's trading, both crude benchmarks rose more than 5%.

Priyanka Sachdeva, senior market analyst at Philip Nova, said oil markets are largely focused on the narrative of a global economic outlook that is reducing fuel demand.

“However, after Iran launched a ballistic missile at Israel, the scale quickly turned towards fears of disruption of oil supplies to the Middle East,” Sachdeva said.

Iran said early Wednesday that its missile attacks on Israel had ended to prevent further provocations, while Israel and the United States vowed to retaliate against Tehran as fears of a wider war intensified.

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

The UN Security Council scheduled a meeting on the Middle East on Wednesday and the European Union called for an immediate ceasefire.

OPEC member Iran's direct involvement raises the possibility of oil supply disruptions, ANZ analysts said in a note, as the country's oil output hit a six-year high of 3.7 million barrels per day in August.

“A major escalation in Iran risks taking the U.S. to war,” Capital Economics said in a note. “Iran contributes about 4% of global oil production, but whether Saudi Arabia increases production will be an important consideration if Iranian supplies are disrupted.”

A panel of ministers from the Organization of the Petroleum Exporting Countries and allies, known collectively as OPEC+, meets later Wednesday to review the market, with no policy changes expected. From December, OPEC+, which includes Russia, is set to increase output by 180,000 barrels per month (bpd).

“Any suggestion of an increase in production could alleviate concerns about supply disruptions in the Middle East,” ANZ's note said.

US inventory data was mixed: Crude oil and distillate inventories fell last week while gasoline inventories rose, market sources said, citing data from the American Petroleum Institute on Tuesday.

Oil investors will also closely monitor Friday's U.S. jobless claims data as it is expected to affect estimates of the Federal Reserve's monetary easing, which could support long-term oil demand by stimulating overall economic activity, Philippe Nover Sachdeva said.

Reporting by Gabriel Ng and Katya Golubkova; Editing by Sonali Paul and Jacqueline Wong

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