Qatar, a major global energy exporter, condemned the attack as “cowardly” and called it a violation of international law.
Brent crude futures rose 37 cents, or 0.56%, to close at $66.39 a barrel. U.S. West Texas Intermediate crude futures climbed 37 cents, or 0.59%, to close at $62.63 a barrel.
The attack on Qatar came hours after Israel said it was about to obliterate Gaza City. Analysts called it a major escalation of Israel’s military campaign across the Middle East.
“The escalation could cause a response for more Arab nations to take a harder stance on Israel,” StoneX analyst Alex Hodes said.
Iran, the United Arab Emirates, Turkey and Saudi Arabia, de facto leader of the OPEC+ group of oil exporters were among countries that condemned the attack in Qatar.
Israel has previously launched attacks on Iran, Syria, Lebanon and Yemen as part of its nearly two-year campaign in Palestine, which has killed more than 64,000 people according to local authorities.
Israel claims its campaign in Gaza is self-defense after an attack by Hamas on October 7, 2023. Israel tallies show Hamas killed 1,200 people and took 251 hostages in Israel that day.
The attack on Qatar is a major setback to recent diplomatic initiatives to resolve the Palestinian conflict, Rystad Energy analysts said.
“What was a fragile negotiation track now appears to be closed, dimming prospects for a near-term resolution of the conflict,” Jorge Leon, head of geopolitical analysis for Rystad said.
Oil benchmarks were already trading higher prior to the attack on Qatar, supported by the latest oil output increase from OPEC+ being smaller than anticipated, expectations that China will continue stockpiling oil and concerns over potential new sanctions against Russia.
Oil traders were also turning their attention to the latest round of U.S. weekly inventory reports, due on Wednesday, and monthly reports from OPEC and the International Energy Agency due Thursday, Ritterbusch and Associates said in a note.
Also in focus is the expectation that the U.S. Federal Reserve, which meets next week, will cut interest rates. Lower rates reduce consumer borrowing costs and can boost economic growth and demand for oil.
U.S. employment data for the 12 months through March was revised lower more sharply than expected on Tuesday, prompting traders to bet that the Federal Reserve will cut short-term rates next week and continue, with more in store this year to shore up the labor market.