Oil prices rise amid spiraling Middle East violence

The price of oil jumped more than $2 a barrel on Wednesday just hours after Hamas political leader Ismail Haniyeh was killed in an early morning air strike, as jittery investors keep an eye on spiraling violence in the Middle East. 

Haniyeh was assassinated in Iran’s capital after he attended the inauguration of the country’s new president, the militant group said. Iranian officials and Hamas have blamed Israel for the strike that killed Haniyeh. Israel has not confirmed that it killed the Hamas chief, but a U.S. official told CBS News’ Margaret Brennan on that the U.S. determined that both Haniyeh and top Hezbollah commander Fuad Shukr were killed in Israeli strikes.

U.S. benchmark oil prices rose $2.64 to $77.38 per barrel, while Brent crude climbed $2.38 to $80.45 per barrel.

Israel had vowed to kill Haniyeh and other senior Hamas figures over the group’s Oct. 7 terrorist attack on Israel, which saw the militants kill some 1,200 people and take about 240 others hostage. The attack sparked the war in Gaza, a densely populated Palestinian territory run for almost two decades by Hamas, which has long been designated a terrorist organization by Israel and the U.S.

Investors are closely watching conflicts in the Middle East for signs that escalating hostilities between Israel and Iran could threaten global oil supplies and drive up energy prices. More than half of all crude oil reserves are in the region, according to current estimates from the Organization of Petroleum Exporting Countries. 

Neither Israel, which just two oil refineries and production capacity of just under 300,000 barrels per day, nor the Palestinian territories are key oil producers, data from the Energy Information Administration shows. But analysts fear a widening conflict risks involving other Middle East nations that are major producers.

Impact on gas prices?

Despite the jump in oil prices, analysts said they don’t expect the latest regional hostilities to lead to higher gas prices for Americans. The national average gas price for regular unleaded as of Wednesday was $3.49 a gallon, down nearly 25 cents from the same period a year ago, according to AAA.

Oil prices are one of many other factors that ultimately determine what motorists will pay at the pump. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that oil prices dropped Tuesday amid concerns that China’s economic slowdown would last longer than expected. Today’s oil price jumps have largely offset the dip earlier this week, he said. 

“We shouldn’t necessarily see gas prices bounce up yet, if at all,” De Haan told CBS MoneyWatch. “Oil would likely have to climb past $80-$82 to see a real impact at the pump.”