Oil prices rise nearly 2% as attention turns to the conflict in the Middle East.

In the Middle East, a key region for oil production, an Israeli airstrike on Beirut killed a senior Hezbollah commander, while cross-border rocket attacks by both sides raised fears of an all-out war in the region.

Oil prices surged nearly 2% on Tuesday, reaching three-week highs due to reports of monetary stimulus in China, the world’s largest crude importer, and concerns that the Middle East conflict could disrupt regional supply.

Oil markets gave up part of their gains as it became clear that the hurricane threatening the U.S. Gulf Coast this week was unlikely to affect most oil and natural gas-producing areas, instead heading towards Florida.

Brent futures rose by $1.27, or 1.7%, to $75.17 per barrel, while U.S. West Texas Intermediate (WTI) crude gained $1.19, or 1.7%, to $71.56 per barrel.

This marked Brent’s highest closing price since September 2. The Chinese government’s announcement of its largest stimulus package since the pandemic, combined with the sudden escalation of tensions in the Middle East, dealt a blow to the bearish sentiment that had dominated oil markets over the past three weeks.

China’s central bank announced the stimulus aimed at pulling the economy out of a deflationary slump and steering it back towards the government’s growth target. However, analysts warned that further fiscal support would be crucial to achieving these goals.

In the Middle East, a critical region for oil production, an Israeli airstrike on Beirut killed a senior Hezbollah commander, while cross-border rocket attacks by both sides raised fears of an all-out war.

These attacks heighten the risk of Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), being drawn into conflict with Israel. Iran backs the Lebanese militant group.