Oil price rises with Middle East conflict

Crude oil rose a second day in New York on supply concerns after Israeli air strikes in the Gaza strip killed more than 285 people, heightening geopolitical tensions in the Middle East, the world's largest producing region.

Oil gained as much as 5.6% as Israel called up 7,000 reservists after two days of air attacks on the Hamas-controlled region. Saudi Arabia, the biggest oil producer, condemned the "brutal" attacks while Syria told the United Nations to end "massacres against defenseless Palestinians." The Middle East produces almost a third of the world's oil.

"A big enough supply-side issue, real or potential, is definitely something that the market could latch onto to stage a bit of a recovery," said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney.

Crude oil for February delivery rose as much as $2.11 to $39.82 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $39.51 at 9:25 a.m. in Singapore.

Oil jumped 6.7% to $37.71 on December 26, the biggest gain in two weeks for a contract closest to expiration. Prices rose as OPEC member-states cut output to prevent a glut and Israel threatened to retaliate for a string of rocket attacks since a six-month truce with Hamas collapsed on December 19.