Oil prices rise on the back of increasing tensions in the Middle East
Oil prices saw an uptick on Thursday following the seizure of an oil tanker by an armed group in Oman, heightening concerns about a potential escalation of conflict in the Middle East.
Brent crude futures this morning saw an increase of $1.03, or 1.3%, reaching $77.83 per barrel, while U.S. West Texas Intermediate crude futures climbed by $0.98, or 1.4%, reaching $72.35. However, the surge in prices was tempered by an unexpected rise in U.S. crude stockpiles.
Trouble in the Red Sea
On Thursday, the United Kingdom Maritime Trade Operations (UKMTO) authority received a report indicating that a vessel approximately 50 nautical miles east of Oman’s coast had been boarded by a group of four to five armed individuals.
Yemen-based Houthis carried out their most extensive assault on commercial shipping routes in the Red Sea on Wednesday, while Israeli strikes in southern and central Gaza escalated.
The United States and Britain suggested the possibility of additional measures if the attacks persisted. Simultaneously, the United Nations Security Council passed a resolution calling for an immediate halt to the Houthi strikes.
Oil demand in the U.S
Despite these geopolitical developments, oil benchmarks experienced a decline on Wednesday. The unexpected surge in U.S. crude stockpiles raised apprehensions about demand in the world’s largest oil market.
Last week, U.S. crude inventories increased by 1.3 million barrels to reach 432.4 million barrels, contrary to analysts’ expectations of a 700,000-barrel draw, as reported by the EIA on Wednesday.
Attention is now focused on U.S. inflation data, which will influence perspectives on the potential timing of interest rate cuts by the Federal Reserve.
Demand in China
Concurrently, sources familiar with the matter revealed that Chinese refiners have requested reduced volumes of Saudi crude oil for February, despite the top oil exporter implementing its most significant price cut in 13 months.
Looking ahead, China’s customs administration is set to unveil December trade data on Friday, offering a comprehensive view of overall demand in the world’s largest oil-importing nation for the entire year.
