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LONDON: Oil rose more than 1% on Monday as attacks by the Houthis on ships in the Red Sea raised concerns of oil supply disruptions, although ample supply and scepticism around Russia’s plan to cut exports in December limited gains.

A Norwegian-owned vessel was attacked in the Red Sea on Monday and oil major BP said it has temporarily paused all transits through the Red Sea. Other shipping firms said over the weekend that they would avoid the route.

Brent crude futures were up $1.40, or 1.8%, to $77.95 a barrel by 1307 GMT, while U.S. West Texas Intermediate crude rose 80 cents, or 1.1%, to $72.23.

Both crude benchmarks posted small gains last week, following seven weeks of decline, after a U.S. Federal Reserve meeting last week raised hopes that interest rate hikes are over and cuts are on their way.

“The rise in geopolitical risk premium, which has come in the form of regular hostilities towards commercial vessels in the Red Sea by Iran-backed Houthi rebels plays its indisputable part in oil’s resurrection,” said Tamas Varga of oil broker PVM. said Tamas Varga of oil broker PVM.

Russia eyes additional oil export cuts of about 50,000bpd in Dec

Even so, despite the rally, Brent and U.S. crude remain in contango, a structure in which oil for prompt delivery trades at a discount to crude for delivery later, suggesting a well supplied physical market, he added.

Also adding support, Russia said on Sunday it would deepen oil export cuts in December by potentially 50,000 barrels per day or more, earlier than promised, as the world’s biggest exporters try to support global oil prices.

This comes after Moscow suspended about two-thirds of loadings of its main export grade Urals crude from ports due to a storm and scheduled maintenance on Friday.

Still, PVM’s Varga was sceptical of the extent to which Russia will make voluntary output cuts.

“In reality it is just re-packaging weather-related halts in exports,” he said.

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