Oil is reacting upwards this Monday after the Sunday's Israeli attack on Lebanon and Hezbollah's response. Brent has exceeded the $81 per barrel (+3.05%, $81.43) and WTI is above $76 (+3.43%, $77.40). The Israeli army launched yesterday a «preemptive strike» with about 100 aircraftopening fire on “thousands of rocket launchers” in 40 areas of Lebanonmostly in the south of the country. “This morning we detected Hezbollah's preparations to attack Israel. Together with the defense minister and the chief of staff, we ordered the Israel Defense Forces (IDF) to initiate action to eliminate the threat,” Israeli Prime Minister Benjamin Netanyahu said at the start of an urgent meeting with the security cabinet. Israel said its preemptive strikes were aimed at thwart a major attack by Iran-backed Hezbollah– after the death of the high military commander Fuad Shukr in an Israeli offensive in late July, Reuters reports. Hezbollah, for its part, said its bombing was in retaliation for the killing of this commander, one of its most important. «Crude oil rose on Friday along with other risk assets, and bulls are joining in today on the news that Israel has declared a 48-hour state of emergency after launching a preemptive strike against Hezbollah sites in southern Lebanon in anticipation of a response to the assassination of its military chief last month,» writes Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in her daily market analysis. What happened this weekend constitutes The most dangerous confrontation between Israel and Hezbollah in 10 months since the fighting was renewed. Attention is now back on the talks for a ceasefire in Gaza taking place in Cairo, which It seems that they continue despite what happened.
«The timing of the Hezbollah attack was surprisinggiven that negotiations for a ceasefire in Gaza are underway. Iran, whose leaders have vowed to avenge the killing of Hamas leader Ismail Haniyeh on its soil in early August, had previously said it would delay its response and give time to peace talks. The next question is If recent developments jeopardize the (ceasefire) talks and change Iran's calculation«, says Danske Bank.