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Brent crude futures climbed $1.50, or 1.91%, to $80.13 a barrel
by 0828 GMT ahead of expiry on Wednesday, while the more active
October contract was at $79.55, up $1.48.
U.S. West Texas Intermediate crude futures were up $1.54, or
2.06%, to $76.27 a barrel.
A day earlier Brent and WTI both fell about 1.4%, closing at
their lowest levels in seven weeks.
Tension in the Middle East heated up on news that Hamas leader
Ismail Haniyeh was assassinated in Iran.
This came a day after the Israeli government claimed it killed
Hezbollah's most senior commander in an airstrike on Beirut in
retaliation for Saturday's rocket attack on Israel.
Separately, the United States also conducted a strike in Iraq in
the latest conflict in the region.
"Overnight developments and elevated geopolitical risk merely
provide temporary reprieve for oil benchmarks. Unless oil and
gas infrastructure is hit, the latest spike is unlikely to
last," said Gaurav Sharma, an independent oil analyst in London.
Still, Brent and WTI are on track in July to post their biggest
monthly loss since October 2023 on lingering concerns about
China's demand outlook and expectations OPEC+ will stick to
their current deal on production and start unwinding some output
cuts from October.
Top ministers from OPEC+, will hold an online joint ministerial
monitoring committee meeting (JMMC) on Thursday.
Slowing fuel demand in China, the world's largest crude oil
importer, is also weighing on oil markets.
China's manufacturing activity in July shrank for a third month,
an official factory survey showed on Wednesday.
"Concerns about Chinese demand remain elevated as today's PMIs
declined, with the manufacturing sector further contracting.
This suggests that any additional gains due to intensifying
tensions in the Middle East may remain limited and short lived,"
said Charalampos Pissouros, senior investment analyst at
brokerage XM.
In the U.S., crude, gasoline and distillate inventories fell
last week, according to market sources citing American Petroleum
Institute figures on Tuesday.
Data from the Energy Information Administration is due at 10:30
a.m. EDT (1430 GMT) on Wednesday.
Crude inventories are expected to have fallen by 1.1 million
barrels in the week to July 26, forecasts from 10 analysts
polled by Reuters showed.
(Reporting by Florence Tan and Arunima Kumar; editing by Michael
Perry and Jason Neely)
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