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Oil Prices Rise Over $1 on Middle East Tensions

Oil Prices Rise Over $1 on Middle East Tensions

Oil prices rose by over $1 on Friday as U.S. Secretary of State Antony Blinken prepared to visit the Middle East to try to contain regional tensions as the Israel-Hamas conflict rages.

Brent crude futures were up $1.10, or 1.42%, at $78.69 a barrel, while U.S. West Texas Intermediate crude futures rose $1.45, or 2.01%, to $73.64 by 1551 GMT.

Both benchmarks are on track to end the first week of the year higher, having recouped losses from Thursday that were triggered by hefty increases in U.S. gasoline and distillate stocks.

The price rebound serves as “a reminder of the risk that is rooted in ever-growing tension in the Middle East,” PVM analyst Tamas Varga said in a note.

Maersk (MAERSKb.CO) announced it will divert all vessels away from the Red Sea for the foreseeable future, warning customers of disruptions.

Israeli forces plan a more targeted approach in Gaza’s north and further pursuit of Hamas leaders in the south, its defence minister said on Thursday.

As the threat of the conflict expanding persists, Blinken was set to travel to the Middle East for a week of diplomacy, the State Department said.

The risk of escalation on the border between Israel and Lebanon is “unfortunately very real”, a German foreign ministry spokesperson said on Friday.

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Investors also watched macroeconomic data for indications of when interest rate cuts might commence, as lower borrowing cuts can spur economic growth and bring higher oil demand.

Euro zone inflation rose in December and could continue rising in early 2024, which would ease pressure on the European Central Bank to start cutting rates.

In the U.S., official data on Friday showed U.S. employers hired more workers than expected in December and raised wages, potentially dampening expectations of the Fed promptly cutting interest rates.

Reuters

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