LONDON: Oil prices rose more than 2% in the first session of the New Year, boosted by potential disruption to Middle East supply after the latest attack on a container ship in the Red Sea and by Chinese demand hopes.

Brent crude rose $1.72, or 2.2%, to $78.76 a barrel by 1115 GMT. U.S. West Texas Intermediate crude was up $1.57, or 2.2%, at $73.22.

A Reuters survey of economists and analysts predicted that Brent crude would average $82.56 a barrel this year, up slightly from the 2023 average of $82.17, with weak global growth expected to cap demand. Geopolitical tensions, however, could provide price support.

U.S. helicopters on Sunday repelled an attack by Iran-backed Houthi forces on a Maersk container vessel in the Red Sea, sinking three Houthi vessels and killing 10 of the militants, fuelling risks of the Israel-Hamas war becoming a wider conflict.

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“The oil price may be affected by the escalation … in the Red Sea over the weekend and the peak demand season during China’s spring festival,” said Shanghai-based CMC Markets analyst Leon Li, referring to the Lunar New Year holiday in early February.

A wider conflict could close crucial waterways for oil transportation.

At least four tankers carrying diesel and jet fuel from the Middle East and India to Europe are sailing around Africa to avoid the Red Sea, ship tracking data shows.

In China, investor expectations of fresh economic stimulus measures rose after manufacturing activity shrank for a third month in December, government data showed on Sunday.

Any such stimulus for economic growth could boost oil demand and support crude prices.


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