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Oil prices firm as Middle East tensions heat up

The oil benchmarks had settled lower on Wednesday after a surprise jump in U.S. crude stockpiles raised concerns over demand in the world's largest oil market

Oil prices rose on Thursday after an oil tanker was boarded by an armed group in Oman, raising the prospect of escalating conflict in the Middle East.

Brent crude futures gained US$1.03, or 1.3%, to US$77.83 a barrel by 0916 GMT and U.S. West Texas Intermediate crude futures rose 98 cents, or 1.4%, to US$72.35, though gains were capped by a surprise build in U.S. crude stockpiles.

The United Kingdom Maritime Trade Operations (UKMTO) authority received a report on Thursday that a vessel about 50 nautical miles east of Oman’s coast was boarded by four to five armed individuals.

The previous day Yemen-based Houthis mounted their largest attack yet on commercial shipping lanes in the Red Sea and Israeli strikes in southern and central Gaza also intensified.

The United States and Britain hinted they would take further measures if the attacks continued. The United Nations Security Council, meanwhile, passed a resolution demanding an immediate end to the Houthi strikes

The oil benchmarks had settled lower on Wednesday after a surprise jump in U.S. crude stockpiles raised concerns over demand in the world’s largest oil market.

U.S. crude inventories rose by 1.3 million barrels to 432.4 million barrels in the week ended Jan. 5, the EIA said on Wednesday, against analyst expectations for a draw of 700,000 barrels.

All eyes are now on U.S. inflation data, which will shape views on how soon the Federal Reserve might cut interest rates.

“Slowing demand, unrest in Middle East and muted price reaction have producers, consumers and market participants alike feeling paranoid about oil prices,” Barclays said on Thursday as the bank lowered its 2024 Brent forecast by US$8 to US$85 a barrel.

Meanwhile, Chinese refiners asked for less Saudi crude oil in February, people with knowledge of the matter said, despite the world’s top oil exporter announcing its biggest price cut in 13 months.

Looking ahead, China’s customs administration will release December trade data on Friday, giving a full-year picture of overall demand in the world’s largest oil importer.



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