Oil rises nearly 2% after Israeli attack in Qatar

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By Shariq Khan

NEW YORK (Reuters) – Oil prices rose more than a dollar a barrel on Tuesday after the Israeli military said it carried out an attack on Hamas leadership in Qatari capital Doha, an expansion of its years-long military campaign across the Middle East.

Qatar, a major global energy exporter, condemned the attack as “cowardly.”

Brent crude futures rose $1.18, or 1.8%, to $67.20 a barrel by 10:33 a.m. ET, while U.S. West Texas Intermediate crude futures climbed $1.14, or 1.8%, to $63.40.

Both contracts were already trading higher, 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.

Speculation of more sanctions on Russia after the country’s biggest air attack on Ukraine set fire to a government building in Kyiv also supported prices. U.S. President Donald Trump said he was ready to move to a second phase of restrictions.

Further sanctions on Russia would diminish its oil supply to global markets, which could support higher oil prices.

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.

“Both commodities and equities are expected to closely track the Federal Reserve’s upcoming policy decision on September 16th–17th, where another rate cut is widely anticipated following last week’s disappointing jobs report,” StoneX analyst Alex Hodes said.

(Reporting by Shariq Khan, Alex Lawler, Ahmad Ghaddar, Anjana Anil and Sam Li; Editing by William Maclean, David Goodman and Nick Zieminski)