New Delhi, Oct 9: On Monday, oil prices saw a 4 percent surge amid concerns that the situation in Israel and Gaza could disrupt Middle East output.

The West Texas Intermediate (WTI), a key benchmark for US oil, soared to over $86 a barrel, and Brent crude prices also experienced a significant rise in early Asian trading, as reported by the BBC.

While Israel and the Palestinian territories are not major oil producers, the Middle East region contributes to nearly one-third of the global oil supply.

The recent wave of attacks initiated by the Hamas militant group in October marked the most substantial escalation between the two sides in decades.

While Western nations criticized the attacks, a Hamas spokesperson informed the BBC that the group had direct backing from Iran for the assault.

Iran, however, denied involvement in the attack during a UN Security Council meeting in New York on Sunday. Nevertheless, Iranian President Ebrahim Raisi expressed support for the attack.

"The risk premium on oil is rising due to the prospect of a wider conflagration that could spread to nearby major oil-producing nations such as Iran and Saudi Arabia," mentioned energy analyst Saul Kavonic to the BBC.

"If the conflict envelops Iran, which has been accused of supporting the Hamas attacks, up to 3 per cent of the global oil supply is at risk," he added.

Kavonic stated that approximately a fifth of the global supply would be "held hostage" if passage through the Strait of Hormuz, a vital oil trading route, is disrupted.

The Strait of Hormuz is critical for the primary oil exporters in the Gulf region, whose economies heavily rely on oil and gas production, as reported by the BBC.

The uncertainty regarding how events may unfold in the coming days might also drive investments into US Treasury bonds and the dollar—a traditional choice for investors during times of crisis, noted James Cheo from HSBC bank.