Israel said it had bombed more than a dozen Hezbollah targets in Beirut on Thursday, as the Group of Seven (G7) warned of an uncontrolled escalation in the Middle East.

According to the IDF, the airstrikes targeted weapons depots, command centers and intelligence personnel. Local authorities said nine people were killed in the center of the Lebanese capital after Israel launched an attack on a Hezbollah-affiliated medical facility.

Israel is stepping up its fight against the Iran-backed militant group after a series of devastating attacks in Lebanon over the past month eliminated much of Hezbollah's top brass, including its leader, Hassan Nasrallah. Iran fired about 200 ballistic missiles at Israel on Tuesday, partly in response to the killing of Nasrallah, and Israeli Prime Minister Benjamin Netanyahu is considering retaliation against Iran.

Biden heightened uncertainty about the next steps Thursday when asked whether the United States would support an Israeli attack on Iranian oil facilities.

"We're discussing that (attacking Iranian oil facilities)," Biden told reporters outside the White House. "I think it's a little bit of a possibility anyway."

Oil prices soared after Biden's comments suggested an attack on energy infrastructure was on the table. It was in stark contrast to his previous comments about a possible Israeli attack on Iran's nuclear program, which Biden said he would not support.

Biden also said he did not expect Israel to retaliate the next day.

A U.S. official said late Thursday that the Biden administration was still in talks with Israel about that country’s response and believed no decision had been made.

Sabrina Singh, a deputy Pentagon spokeswoman, said the talks between the United States and Israel were "more about trying to understand how they might respond."

The United States and its allies have been working to influence Israel’s response to Tuesday’s attack, aiming to push back against Iran while avoiding further tit-for-tat escalation that could draw the United States and other countries into an all-out regional war.

The G7 group, led by the United States, issued a statement late Thursday calling on regional countries to "act responsibly and with restraint." The G7 statement said: "A dangerous cycle of attacks and retaliation risks exacerbating an uncontrolled escalation of the situation in the Middle East, which is not in anyone's interest." It urged an immediate ceasefire in the Gaza Strip.

The G7 said it was "deeply concerned" about the situation in Lebanon and noted the need for a "swift cessation of hostilities" but, unlike the situation in Gaza, it stopped short of calling for an immediate ceasefire.

Just before Israel killed Nasrallah, the United States and some of its G7 and Arab allies tried and failed to broker a ceasefire in the Lebanese conflict. Iran and Israel engaged in a relatively limited missile exchange in April.

Joseph Votel, former head of U.S. Central Command and now a distinguished senior fellow at the Middle East Institute, said Israel's response "will be a little different this time," noting that Iran fired a larger number of missiles.

Israel’s goal will be to “punish and make them pay,” Votel said. “They’ll probably choose something that has some value to the Iranian regime.”

Iran says its heavy attacks on Israel are revenge for the assassination of Nasrallah and a senior Hamas official in Tehran in July.

Israel sent troops to southern Lebanon on Monday to try to root out Hezbollah militants along the border. The Lebanese government says hundreds of Lebanese civilians have been killed in Israeli airstrikes over the past two weeks, and a million have fled their homes in the south and other parts of the country. Israel has also bombed targets in Yemen in recent days and is suspected of doing so in Syria as well.

On Thursday, the Lebanese army said an Israeli attack on a post in the country's south had killed one soldier. Israel said on Wednesday that eight soldiers had been killed in fighting Hezbollah, the first casualties since its ground invasion began earlier this week. The IDF said late Thursday that Hezbollah had fired about 230 "projectiles" into Israel.

Netanyahu has broad domestic support for his ground and air offensive inside Lebanon, which is also aimed at ensuring that tens of thousands of displaced Israelis can return to their homes in the north.

Netanyahu is under pressure from Israelis to respond more strongly to Iran's onslaught than he did in April.

Hitting Iran's export capacity could affect 1.5 million barrels of oil supply per day

The market also expects that Israel may retaliate against Iran's recent missile attacks, including attacks on the country's oil infrastructure. After Biden was asked whether he would support Israel's attacks on Iranian oil facilities, WTI crude oil prices surged more than 5% to close above $73 a barrel, marking the largest percentage gain in nearly a year and the highest closing price in more than a month. Any disruption to supply in the region would lead to a sharp rise in oil prices, which is a major risk for the United States just one month away from the election.

While it is unclear how Israel would respond to Iran, possible scenarios include attacks on military targets, oil facilities and even nuclear facilities. The Persian Gulf country is OPEC's third-largest oil producer, accounting for about a fifth of global demand for crude oil supplies and large amounts of liquefied natural gas passing through the Strait of Hormuz along Iran's coast. Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Qatar ship goods through this major waterway.

The map below shows Iran's major energy facilities, including oil and gas fields, pipelines, refineries, and storage terminals.

“The fact that energy infrastructure is now being considered as a potential target is not entirely surprising to the market, but hearing Biden’s comments on this brings the possibility closer to reality,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. “There has been some skepticism as to whether Israel would actually target oil facilities, largely due to the influence of the Biden administration, which is keen to keep oil prices stable ahead of the upcoming election.”

Citigroup analysts including Francesco Martoccia said in a note on Wednesday that a major Israeli strike on Iran’s export capacity could remove 1.5 million barrels per day from the market. If Israel attacks smaller infrastructure such as downstream assets, the analysts said, 300,000 to 450,000 barrels of oil production could be lost.

Oil investors are also bracing for more volatile moves in the coming days as algorithm-driven traders, who have come to dominate daily market activity, react to developments in the Middle East. While much of crude’s recent gains have been driven by speculators unwinding record bearish positions, some are finally starting to make bullish bets now, traders said.

The recent price surge has caused Brent crude implied volatility to surge to its highest level in nearly a year. Trading in call options on Brent hit a record high on Wednesday, led by the $100-a-barrel contract.

Beyond the Middle East crisis, there are signs of ample supply. OPEC+ plans to restore some of the shut-in capacity and will start increasing production in December after a two-month delay. Libya resumed oil production after the political deadlock eased, producing hundreds of thousands of barrels a day.

Meanwhile, official U.S. data showed crude inventories unexpectedly rose by 3.89 million barrels last week, the biggest increase in about five months. "The market is artificially tight because OPEC+ holds about 6 million barrels per day of spare capacity, and they have a plan to bring it back, even if they may continue to delay it," said Eric Lee of Citigroup. "With that plan in place, with so much potential oil in the market, I think it has been limited, providing a soft ceiling for where prices can go."

The article is forwarded from: Jinshi Data