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Investing.com– Oil prices rose sharply in Asian trade on Friday after U.S.-led forces launched airstrikes against the Iran-backed Houthi group in Yemen, ramping up concerns over more disruptions to Middle East supplies.
The U.S. military carried out airstrikes against multiple Houthi-controlled areas of Yemen late-Thursday, media reports said. The strikes came shortly after Iran seized an oil tanker with Iraqi oil in the Gulf of Oman.
Tensions with Iran and the Houthi attacks saw several shipping operators steer clear from the region, which pointed to potential delays in crude shipments through the Suez Canal.
The Israel-Hamas war, which is at the heart of recent instability in the Middle East, also showed no signs of stopping.
Persistent concerns over the Middle East offered some support to oil prices in recent weeks, particularly as markets feared that widespread conflict in the region will disrupt oil supplies in 2024.
Brent oil futures expiring in March jumped 1.9% to $78.85 a barrel, while West Texas Intermediate crude futures rose nearly 2% to $73.50 a barrel by 20:08 ET (01:08 GMT).
Middle East tensions help crude trade past barrage of negative signals
Concerns over supply disruptions helped oil prices gain despite a string of negative signals this week, although they were still set for a muted weekly performance.
Data on Thursday showed U.S. consumer price index inflation grew slightly more than expected in December, dampening hopes that the Federal Reserve will begin cutting interest rates early this year.
Before that, U.S. inventory data on Wednesday showed an unexpected increase in crude stockpiles, with gasoline and distillate inventories logging a second week of outsized builds. The reading showed that demand in the world’s largest fuel consumer remained weak, with a severe winter storm further disrupting travel in the country.
Oil prices had marked a weak start to the week after top exporter Saudi Arabia slashed the prices of oil sales to Asia and parts of Europe, as it grappled with increased competition and softening demand.
Strength in crude this week was also driven by a measure of bargain buying, after prices slid over 10% in 2023 and fell further in the first week of 2024. Barring the Middle East disruptions, oil markets are expected to remain largely well-supplied in early-2024 on record-high U.S. production, while demand is expected to weaken amid pressure from high interest rates and inflation.
Top oil importer China is also set to see softer demand, as a post-COVID economic recovery struggles to take off in the country. Inflation and trade data for December is due later on Friday, and is expected to offer more cues.
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Source: Investing.com
