NEW YORK: Oil prices climbed about 3% to a two-week high on Thursday after Iran seized an oil tanker off the coast of Oman, raising the prospect of escalating conflict in the Middle East.
Brent futures rose $2.23, or 2.9%, to $79.03 a barrel by 11:25 a.m. EST (1625 GMT), while, US West Texas Intermediate (WTI) crude rose $2.34, or 3.35, to $73.71.
That puts Brent on track for its highest close since Dec. 27. Iran seized a tanker with Iraqi crude destined for Turkey in retaliation for the confiscation last year of the same vessel and its oil by the US The seizure of the Marshall Islands-flagged St Nikolas coincides with weeks of attacks by Yemen’s Iran-backed Houthi militias targeting Red Sea shipping routes.
Yemen-based Houthis this week mounted their largest attack yet on commercial shipping lanes in the Red Sea. The US and Britain hinted they would take further measures if the attacks continued. The UN Security Council passed a resolution demanding an immediate end to the Houthi strikes.
The group’s leader, Abdel-Malek al-Houthi, said any attack on the Houthis would not go without a response, noting any such response would be bigger than the recent strike in which its drones and missiles targeted a US ship in the Red Sea.
Israel, meanwhile, faced down accusations at the World Court of genocide in its war in Gaza, as the first residents returned to scenes of total devastation in the north of the enclave where Israeli forces began withdrawing this week.
Global trade declined by 1.3% from November to December 2023 as attacks on merchant vessels in the Red Sea led to a plunge in the volumes of cargo transported in the region.
“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 $8 to $85 a barrel.
In the US, data showed consumer inflation rose 3.4% in December on a yearly basis versus a 3.2% increase expected by economists polled by Reuters. On a monthly basis, it rose 0.3% versus the anticipated 0.2% increase.