Oil calms down after rally

Oil prices settled after their biggest rise in six months on the prospect of escalating tensions in the Middle East. U.S. crude rose 4.3 percent on Monday to trade around $86 a barrel after markets rose 1.3 percent on Saturday as Israel and Hamas clashes began. Israel announced its biggest-ever mobilization of more than 300,000 reservists as it launched an air and sea assault on Gaza, and Prime Minister Benjamin Netanyahu vowed to “change the Middle East.” The conflict has added to oil volatility after wild swings last month as economic concerns weighed on a recovery supported by supply cuts from Saudi Arabia and Russia. While Israel’s role in global oil supplies is limited, the conflict threatens to shake both the United States and Iran. Any retaliation against Tehran, which supports Hamas, could jeopardize the ability of ships to pass through the Strait of Hormuz, a vital channel that carries most of the world’s crude and which the Iranian government has previously threatened to close. Iran denied involvement in the attack on Monday. “When we’ve seen Palestinian-Israeli conflicts in the past, the price increase that we’ve seen reflected in oil prices has been pretty temporary because of the limited impact on supply,” said Vivek Dhar, director of research at Mining and Energy Commodities.