Filomena Scalise

New York - The price of oil gained nearly three percent on Monday on rising concern about the Middle East and less worry about the US “fiscal cliff”.

President Barack Obama and leaders of the House and Senate appeared to have constructive discussions on Friday to avoid a series of automatic tax increases and spending cuts scheduled to kick in on January 1 in the absence of government action. Economists have been warning of dire consequences if no action is taken, including the possibility of another recession.

Overseas, the escalating conflict between Israel and Hamas raised concerns about Middle East crude supplies. Analysts say supplies could be disrupted if the conflict engulfs countries elsewhere in the Middle East, a region that produces more than one-third of the world's oil.

Benchmark crude rose $2.54, or 2.9 percent, to $89.46 per barrel around midday in New York.

Brent crude, which is used to price international varieties of oil, rose $2.65, or 2.4 percent, to $111.60 a barrel in London.

US stocks were rising as well. The Dow Jones industrial average was on track for its biggest one-day increase since September 13. - Sapa-AP