Brent crude futures gained 29 cents, or 0.4%, to $83.84 a barrel after reaching a session-high of $84.80, and U.S. WTI crude added 34 cents, or 0.4%, to $78.35 a barrel after hitting an intraday high of $79.29 earlier in the session
Oil prices jumped on Monday after attacks in the Middle East added to concerns over supply disruption in the region amid an attack on vessels in the Red Sea, hitting a Trafigura-operated fuel tanker.
Risks of a widening conflict comes as Russian refined product exports are set to drop, with several refineries under repair following drone attacks.
Brent crude futures gained 29 cents, or 0.4%, to $83.84 a barrel by 0230 GMT after reaching a session-high of $84.80. U.S. West Texas Intermediate (WTI) crude added 34 cents, or 0.4%, to $78.35 a barrel after hitting an intraday high of $79.29 earlier in the session.
We believe the death of three U.S. service members today in Jordan marks a critical inflection point in the ongoing conflict in the Middle East and raises a spectre of a more substantial U.S. involvement in the war, RBC Capital analyst Helima Croft said in a note, adding that a more direct confrontation with Iran raises the spectre of regional energy supply disruptions.
Commodities trader Trafigura said on Saturday it was evaluating the security risks of further Red Sea voyages after firefighters put out a blaze on a tanker which was attacked a day earlier.
Disruptions to supply have been limited, but that changed on Friday after an oil tanker operating on behalf of Trafigura was hit off the coast of Yemen, ANZ analysts said in a note.
With oil tankers linked to the U.S. and UK now under threat of attack, the market is likely to reprice the risk of disruptions, they added.
Both contracts increased for a second successive week and settled at their highest in nearly two months on Friday, supported by Middle East and Russian supply concerns while positive U.S. economic growth and signs of Chinese stimulus bolstered demand expectations.
The air of complacency lingering around the oil market has evaporated, IG markets analyst Tony Sycamore said.
Dips in West Texas Intermediate are likely to find buyers back towards the 200-day moving average at $77.60, before a stronger layer of support at $75.00 from buyers looking for a push into the low $80’s, he added.
On February 1, leading ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, will meet online.
Nevertheless, OPEC+ will likely decide its oil production levels for April and beyond in the coming weeks, OPEC+ sources said, as the meeting would take place too early for decisions to be made on further output policy.