Oil prices rose on Wednesday due to escalating tensions in the Middle East and positive economic indicators in the US.

International benchmark Brent crude rose 0.70% to $77.72 a barrel at 10:48 a.m. local time (0748 GMT), from the previous session's close of $77.18.

The US benchmark, West Texas Intermediate (WTI), rose 0.56% to $73.98 a barrel, from the previous session's close of $73.57.

The ongoing conflict in the Middle East, home to a significant portion of the world's hydrocarbon reserves, has supported this rise in prices.

Fighting between the Israeli army and Hezbollah has continued since October 2023.

On Wednesday, Lebanon's Hezbollah announced it had repelled two attempted incursions by Israeli forces into southern Lebanon, using artillery and rockets, which reportedly wounded Israeli soldiers. A later statement by Hezbollah described a similar clash in the town of Blida.

Despite warnings from international observers about the risk of a wider regional conflict, Israel expanded its operations on October 1, launching a ground invasion in southern Lebanon as it continues its offensive against Hezbollah and Gaza.

Oil prices had fallen more than 4% on Tuesday after reports indicated Hezbollah was calling for a ceasefire with Israel, although some analysts have questioned the timing of the call.

US State Department spokesman Matthew Miller reacted to these ceasefire efforts on Tuesday, saying: "Where have they been for a year? For a year, the world has called on Hezbollah to stop attacks across the border into Israel. "

In addition to geopolitical concerns, positive economic data from the US also influenced the increase in oil prices. Optimism remains high in the US that inflation can be reduced to target levels without triggering a recession, as economic growth remains steady and unemployment rates low. Experts are closely watching inflation data, scheduled for release on Thursday, for further insights into economic activity.

Analysts believe these data could signal whether the US economy is on track for a "soft landing". Additionally, minutes from the upcoming Federal Open Market Committee (FOMC) meeting are expected to provide insight into future policy directions.

Analysts predict that the US Federal Reserve (Fed) will cut interest rates by 25 basis points at each of its two remaining meetings this year.