Oil prices gained $3 on Thursday as concerns mounted that a widening regional conflict in the Middle East could disrupt global crude flows with Israel reportedly planning to target Iran’s oil and gas infrastructure.

Brent crude oil, against which Nigerian oil is priced, inched higher by $3.72, or 5.03 percent to close at $77.62 a barrel while the US West Texas Intermediate (WTI) crude appreciated by $3.61, or 5.15 percent to $73.71.

Prices have continued to rise in the aftermath of Iran’s Tuesday attack on Israel, which involved around 200 missiles.

Following the missile barrage, Israel’s ground troops clashed with Hezbollah forces in southern Lebanon, with Israeli Prime Minister Benjamin Netanyahu vowing separate revenge on Iran.

The latest round of escalation was sparked by Israel’s sanctioned elimination of Hezbollah chief Hassan Nasrallah and Hamas political leader Ismail Haniyeh.

The tension was further sparked after US President Joe Biden indicated that there is a possibility of Israel striking Iran’s oil facilities.

This is after Israeli officials said on Wednesday that Israel could target Iran’s strategic energy infrastructure, including oil and gas rigs or nuclear installations, which would have the biggest economic impact, and send shockwaves through oil markets.

Iran is a member of the Organisation of the Petroleum Exporting Countries (OPEC) with production of around 3.2 million barrels per day or 3 percent of global output.

Market analysts also raised concerns that such escalation could prompt Iran to block the Strait of Hormuz or attack Saudi infrastructure as it did in 2019. The strait is a key logistical chokepoint through which 20 percent of daily oil supply passes.

The market will also weigh development coming from Libya as oil production resumed after more than a month of suspended output due to a political standoff between the eastern and western administrations in the North African OPEC producer.

The end of this Libyan crisis will lead to the return of a few hundred thousand barrels of crude per day to the market.

Also, US crude inventories rose by 3.9 million barrels to 417 million barrels in the week ended September 27, the US Energy Information Administration (EIA) said on Wednesday.

A rise in inventories shows that the US market is well-supplied and can withstand any disruptions.

Oil continued to rise on Wednesday over worries that the escalating conflict in the Middle East could threaten oil supplies.

Brent futures rose 34 cents, or 0.46%  to settle at $73.90 per barrel while the US West Texas Intermediate (WTI) crude climbed 27 cents, or 0.39%, to settle at $70.10 per barrel.

Meanwhile, Israel and its ally, the US vowed payback for the attack, a sign that conflict in the region is intensifying after Iran fired more than 180 missiles at Israel, its biggest-ever direct attack on the country on Tuesday.

Since the late Tuesday bombing, Israeli ground troops have fought with Hezbollah in southern Lebanon, with Israeli Prime Minister Benjamin Netanyahu vowing vengeance and raising fears of a full-fledged conflict.

According to rumors, Israel’s reaction might include hitting Iranian oil production facilities and other critical targets.

On Wednesday, Iran said that its missile attack on Israel was stopped, barring further provocation.

It claimed that any Israeli retaliation to its attack would result in widespread destruction as Iran accounts for around 4% of world oil output.

Analysts say that an attack on Iran’s oil infrastructure could provoke it to respond with a strike on Saudi oil facilities, similar to one conducted in 2019 on crude processing facilities there.

Meanwhile, a meeting on Wednesday of the top ministers of the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ kept oil output policy unchanged.

The group is set to raise output by 180,000 barrels per day each month from December.

Meanwhile, the US Energy Information Administration (EIA), the official US agency, reported an estimated inventory build of 3.9 million barrels for the week to September 27, driven by the latest escalation in the Middle East.

The inventory change compared with a draw of 4.5 million barrels for the previous week, which also saw declines in fuel inventories.

It also compared with the American Petroleum Institute’s estimate, which pegged crude oil inventory change for the final week of September at a negative 1.5 million barrels.

Global oil prices headed north on Tuesday as Middle East tensions surged interests with Iran reportedly preparing to launch a missile attack on Israel.

As of press time, Brent crude traded at $73.61 per barrel, up 4.2% (+$3.00) while the US West Texas Intermediate (WTI) crude was at $70.16 per barrel, up 4.5% (+$3.08).

Reports from U.S. officials suggest that an Iranian missile strike is imminent—the specter of which is driving uncertainty across global markets.

The possibility of an attack will heighten the risk of supply disruptions as conflict could further spread or target key infrastructure in oil-producing nations.

The development is happening due to recent Israeli military actions against Hezbollah in southern Lebanon.

Market analysts noted that the move has further heightened fears of a broader regional conflict since Iran has a significant influence on the region’s oil flows. This means an escalation in military activity has the potential to hinder exports, driving prices higher.

The world’s largest economy, the US has shown support for Israel’s defense and warned Iran of severe consequences if an attack is carried out.

According to Reuters, the Organisation of the Petroleum Exporting Countries and its allies known as OPEC+ is unlikely to recommend any changes to its current deal to reduce production and to start unwinding some cuts from December when it meets this week.

OPEC+ will hold an online joint ministerial monitoring committee (JMMC) meeting on Wednesday (October 2) at 1200 GMT (1pm Nigerian time).

OPEC+ is currently cutting output by a total of 5.86 million barrels per day, which represents about 5.7 percent of global demand, in a series of steps agreed since late 2022.

Its latest agreement calls for OPEC+ to raise output by 180,000 barrels per day in December, part of a plan to gradually unwind its most recent layer of voluntary cuts during 2025.

OPEC+ delayed the start of phasing out the output cuts, initially planned for this month but now the group expects to start bringing back supply to market in December, if the market conditions are more favourable.