Oil prices rose on Thursday, continuing the strong gains from the previous session due to ongoing concerns about supply disruptions in the Middle East. This is a result of disruptions at a field in Libya and increased tension surrounding the Israel-Gaza war.
Brent crude increased by 38 cents, or 0.5%, to $78.63 a barrel by 0440 GMT, while US West Texas Intermediate crude futures rose by 52 cents, or 0.7%, to $73.22.
Both benchmarks rose by around 3% on Wednesday, marking the first time in five days for them to settle higher, with WTI experiencing its largest daily percentage gain since mid-November.
“A confluence of headlines around further tensions in the Red Sea and a full shutdown of Libya’s Sharara oilfield from local protests have renewed concerns about global oil supply disruptions,” said Yeap Jun Rong, market strategist at IG.
Local protests led to a complete shutdown of production at Libya’s Sharara oilfield, which has the capacity to produce up to 300,000 barrels per day. This field, one of Libya’s largest, has frequently been a target for local and broader political protests.
Earlier on Tuesday, the deputy leader of Hamas was killed in a strike in Beirut, the first such strike to hit the Lebanese capital in almost three months of near-daily fire between the Israeli military and Iran-backed Hezbollah, which had primarily been confined to the border region.
Shipping concerns in the Red Sea escalated after Yemen’s Iran-backed Houthis claimed they had “targeted” a container ship bound for Israel on Wednesday. US Central Command said the militant group had fired two anti-ship ballistic missiles in the southern Red Sea the day before.
The market was also supported by data from the American Petroleum Institute, showing US crude stocks fell by 7.4 million barrels in the week ended Dec. 29, which was double the drawdown that analysts polled by Reuters had expected.
Weekly data from the Energy Information Administration, the statistical arm of the US Department of Energy, is due at 11:00 am (1600 GMT) on Thursday, delayed by a day due to the New Year’s holiday on Monday.
The Organization of the Petroleum Exporting Countries (OPEC) stated on Wednesday that cooperation and dialogue within the wider OPEC+ producer alliance will continue, after OPEC member Angola announced it would leave the bloc last month.
A meeting of the group has been announced for February 1 to review the implementation of its latest oil output cut.
Analysts at Goldman Sachs expect Brent to range between $70 and $90 a barrel in 2024 based on flexible OPEC+ supply, a low risk of recession, and strategic petroleum reserve purchases by China and the US.
The analysts added in a Jan. 3 client note that geopolitical risk scenarios will remain a key upside risk to the forecast.