Oil rebounds after Hamas leader killed in Iran

BENGALURU, July 31 (Reuters): Oil prices climbed around $2 on Wednesday, rebounding from 7-week lows, as the killing of a Hamas leader in Iran ratcheted up tensions in the Middle East and overshadowed concerns about weak China demand.

Brent crude futures were up $1.95, or 2.5 per cent, to $80.58 a barrel by 1331 GMT ahead of expiry on Wednesday, while the more active October contract was up $2.14 at $80.21.

US West Texas Intermediate crude futures were up $2.23, or 3 per cent, to $76.96 a barrel.

A 0.4 per cent fall in the US dollar index also lent support to prices. A weaker dollar can boost demand for oil by making greenback-denominated commodities like oil cheaper for holders of other currencies.

A day earlier Brent and WTI both fell about 1.4 per cent, closing at their lowest levels in seven weeks.

Tension in the Middle East heated up on news that Hamas leader Ismail Haniyeh was assassinated in Iran.

This came a day after the Israeli government claimed it killed Hezbollah's most senior commander in an airstrike on Beirut in retaliation for Saturday's rocket attack on Israel.