Oil prices increased by approximately 1% on Thursday, extending gains due to concerns about Middle Eastern supply disruptions. This was prompted by disturbances at Libya's Sharara oilfield and heightened tensions related to the Israel-Hamas conflict.
Libyan Oilfield Disruption
Local protests led to a production shutdown at Libya's Sharara oilfield on Wednesday. The field, with a capacity of up to 300,000 barrels per day, has often been a target for political protests.
Price Movement
Brent crude rose by 70 cents (0.9%) to $78.95 a barrel, while U.S. West Texas Intermediate crude futures climbed 74 cents (1%) to $73.44 by 1148 GMT.
Market Strategist's Perspective
According to Yeap Jun Rong, a market strategist at IG, the combination of tensions in the Red Sea and the complete shutdown of Libya’s Sharara oilfield has renewed concerns about global oil supply disruptions.
Geopolitical Developments
The oil market also found support from the American Petroleum Institute's data, revealing a crude stock drawdown of 7.4 million barrels, twice the expected reduction.
Additional Insights
Despite rising product stocks, John Evans of oil broker PVM suggests that observers will likely focus on the significant 7.4 million barrel draw in crude inventory due to Libya and the rekindled war premium.
Geopolitical Tensions
On Wednesday, two explosions occurred at a ceremony in Iran, resulting in nearly 100 casualties. These events followed the commemoration of commander Qassem Soleimani, who was killed by a U.S. drone in 2020. Iran has vowed retaliation.
Red Sea Concerns
Shipping concerns in the Red Sea persisted after Yemen’s Iran-backed Houthis claimed to have targeted a container ship bound for Israel. U.S. Central Command reported that the militant group fired two anti-ship ballistic missiles in the southern Red Sea the previous day.
Upcoming Inventory Figures
Official inventory figures from the U.S. Energy Information Administration are expected at 1600 GMT, adding another layer of anticipation to the evolving oil market scenario.