Oil prices experienced a notable increase on Thursday following an incident where an armed group boarded an oil tanker in Oman, raising concerns about a potential escalation of conflict in the Middle East.
Brent crude futures rose by $1.03, or 1.3%, reaching $77.83 per barrel by 0916 GMT. Similarly, U.S. West Texas Intermediate crude futures saw a gain of 98 cents, or 1.4%, reaching $72.35 per barrel. However, these gains were tempered by an unexpected build in U.S. crude stockpiles.
The United Kingdom Maritime Trade Operations (UKMTO) received a report indicating that an armed group boarded a vessel approximately 50 nautical miles east of Oman’s coast. This incident occurred in the wake of significant attacks on commercial shipping lanes in the Red Sea by Yemen-based Houthis and heightened Israeli strikes in southern and central Gaza. The United States and Britain signaled their readiness to take further measures if such attacks persist, while the United Nations Security Council passed a resolution demanding an immediate end to Houthi strikes.
Oil benchmarks had faced a dip on Wednesday due to concerns about demand following an unexpected increase in U.S. crude stockpiles. According to the Energy Information Administration (EIA), U.S. crude inventories rose by 1.3 million barrels to 432.4 million barrels in the week ending Jan. 5, contrary to analyst expectations for a draw of 700,000 barrels.
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. Barclays noted the prevailing concerns about oil prices amid slowing demand and Middle East unrest, as the bank lowered its 2024 Brent forecast by $8 to $85 a barrel.
Simultaneously, reports indicate that Chinese refiners have requested less Saudi crude oil in February, despite Saudi Arabia announcing its most significant price cut in 13 months. Looking ahead, China’s customs administration is set to release December trade data on Friday, offering insights into overall demand in the world’s largest oil-importing nation.
Quest: Cris-Edesiri Odjomah