The price of oil rose today on new concerns about possible supply disruptions in the Middle East after Israel launched air strikes in Gaza.

Benchmark oil rose 76 cents to 86.14 dollars per barrel in New York. Brent crude, used to price international varieties of oil, rose 1.22 dollars to 108.56 dollar per barrel in London.

Israeli leaders said the air strikes, which killed a Hamas military commander, were the start of a broad operation in response to days of heavy rocket fire from militants in the neighbouring Palestinian territory.

Meanwhile, global economic issues and the "fiscal cliff" in the US are still in focus. Unless President Barack Obama and Congress reach a compromise, a series of expiring tax cuts and broad spending cuts will take effect in January, seriously impacting the world's largest economy.

Elsewhere official figures showed industrial production dropped 2.5% in September in the 17 countries that use the euro as currency. It was the largest monthly decline since January 2009.

Slower economic growth means less demand for energy products such as gasoline, heating oil and natural gas.

"The market is really kind of torn right now on the next direction," Price Futures Group oil analyst Phil Flynn said.

"Everyone is waiting around to see if we're going to go over the fiscal cliff."