Oil rose Monday on fresh Middle East fears as Joe Biden pledged to retaliate for the killing of three US service members in a drone attack on a base in Jordan.
The attack ramped up tensions in the region and stoked worries about supplies through the key trade waterway.
Both main crude contracts rose more than one percent in early trade -- hitting levels not seen since November -- before paring the gains slightly.
"The news of three US troops being killed by a drone attack, and President Biden saying 'we shall respond', will likely dial up the market's focus on the region," Andrew Ticehurst, at Nomura, said.
Crude oil prices rose to near 12-week highs, breaking out of the recent range.
This could spell a significant escalation in the Mideast conflict. The decline in US inventories last week (although probably weather-led), as well as the resilient US economy and China’s stimulus measures, could also push oil prices higher. Gold also got a safety bid at the open this morning in Asia but could not
sustain the gains.
Metals ended the week stronger on China optimism, and the focus this week will be on any further measures.