Oil prices remained rose on Thursday as analysts said financial markets "remained on edge" as tensions in the Middle East are being watched carefully for potential escalation.
Following the missile strike by Iran on Israel earlier in the week, Israeli Prime Minister Benjamin Netanyahu said the country intends to retaliate, warning that Iran "will pay" for its actions, though US President Joe Biden urged Israel not to attack nuclear facilities.
"There doesn't seem to be a desire from the US at the moment for a sizeable escalation," said Deutsche Bank strategist Jim Reid.
The market reaction has been seen in oil prices, with Brent crude yesterday on track for its biggest two-day gain of 2024 so far, with 3.5% gains to above $76 a barrel at the highs, before they were pared back.
This morning Brent was up 1.3% this morning at just under $75, while shares in FTSE 100 heavyweights Shell PLC and BP were up 0.7% and 0.3% respectively.
Kathleen Brooks, market analyst at XTB, said while oil price rallies have fizzled back from $75 a barrel as the days have progressed this week, "any escalation in tensions between Israel and Iran could see Brent rise above this level".
"However, the fact that the oil price has not been able to sustain gains above this level, suggests that Brent’s recent rally could fade if headline risk from the region recedes."