Oil continues to rise amid concerns over supply disruptions in the Middle East

Oil prices rose more than 1% on Thursday, bolstered by concerns over disruptions at a Libyan oilfield and heightened tensions related to the Israel-Hamas conflict in the Middle East.

On Wednesday, protests led to a production halt at Libya’s Sharara oilfield, which has a capacity of up to 300,000 barrels per day. As one of Libya’s major oilfields, it has frequently been subject to both local and broader political demonstrations.

Brent crude climbed 92 cents, or 1.2%, reaching $79.17 per barrel by 0908 GMT, while U.S. West Texas Intermediate crude futures surged 93 cents, or 1.3%, to $73.63.

“A confluence of headlines around further tensions in the Red Sea and a full shutdown of Libya’s Sharara oilfield from local protests have renewed concerns about global oil supply disruptions,” said market strategist at IG, Yeap Jun Rong.

On Wednesday, both benchmarks rose approximately 3%, closing higher for the first time in five days. Additionally, oil received support from data released by the American Petroleum Institute indicating a more significant than expected decline in crude stocks by 7.4 million barrels, doubling the anticipated drawdown.

John Evans of oil broker PVM noted that while the API’s report indicated an increase in product stocks, attention is likely to focus on the substantial 7.4 million-barrel decline in crude inventory due to concerns about Libya and the renewed war premium.

On Wednesday, nearly 100 people were killed and many more injured in two explosions during a ceremony in Iran commemorating Commander Qassem Soleimani, who was killed by a U.S. drone in 2020. Iran has expressed its intent for revenge in response.

Shipping concerns in the Red Sea persisted as Yemen’s Iran-backed Houthis claimed on Wednesday that they had “targeted” a container ship heading to Israel. U.S. Central Command confirmed that the militant group had launched two anti-ship ballistic missiles in the southern Red Sea the day before.

Official inventory figures from the Energy Information Administration will be released at 1600 GMT.

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