Oil prices surge after attack off Oman

London — Oil prices rose on Thursday after an oil tanker was boarded by an armed group off Oman, raising the prospect of escalating conflict in the Middle East.

Brent crude futures gained $1.03, or 1.3%, to $77.83 a barrel by 9.16am GMT and West Texas Intermediate was up 98c, or 1.4%, to $72.35, though gains were capped by a surprise build in US crude stockpiles.

The UK Maritime Trade Operations authority received a report on Thursday that a vessel about 50 nautical miles east of Oman was boarded by four to five armed individuals. The previous day Yemen-based Houthis mounted their biggest attack yet on commercial shipping lanes in the Red Sea and Israeli strikes in southern and central Gaza also intensified.

The US and Britain hinted they would take further measures if the attacks continued. The UN Security Council, meanwhile, passed a resolution demanding an immediate end to the Houthi strikes

The oil benchmarks had settled lower on Wednesday after a surprise jump in US crude stockpiles raised concerns about demand in the world’s biggest oil market.

US crude inventories rose by 1.3-million barrels to 432.4-million barrels in the week ended January 5, the EIA said on Wednesday, against analyst expectations for a drawdown of 700,000 barrels.

All eyes are now on US inflation data, which will shape views on how soon the Federal Reserve might cut interest rates.

“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.

Chinese refiners asked for less Saudi crude oil in February, people with knowledge of the matter said, despite the world’s top oil exporter announcing its biggest price cut in 13 months.

China’s customs administration will release December trade data on Friday, giving a full-year picture of overall demand in the world’s biggest oil importer.

Reuters