Oil prices rose on Wednesday, October 18, as tensions escalated in the Middle East after hundreds were killed in a hospital explosion in Gaza, raising concerns about disruptions to oil supplies from the region.

By 02:25 GMT, Brent crude futures increased $2.07, or 2.3%, to $91.97 per barrel. US West Texas Intermediate crude futures also rose $2.26, or 2.6%, to $88.92 per barrel.

Vivek Dhar, an analyst at the Commonwealth Bank of Australia, said in a note to clients that canceling the summit between Biden and Arab leaders reduces the chances of reaching a diplomatic solution to the conflict between Hamas and Israel.

Oil prices also received support from a decline in US crude inventories by about 4.4 million barrels in the week ending October 13, according to market sources, citing figures from the American Petroleum Institute on Tuesday.

This was a sharp decline compared to analysts' expectations of a decline of only 300,000 barrels.

On the demand side, official data showed on Wednesday that the Chinese economy grew faster than expected in the third quarter, indicating that the recent recovery may be enough for Beijing to achieve its growth goal for the full year.

Meanwhile, US retail sales rose more than expected in September, reinforcing expectations that the US Federal Reserve will raise interest rates again by the end of the year. Raising interest rates to reduce inflation could slow economic growth and reduce demand for oil.