VINACHEM

Oil pushed higher — after jumping more than 3% on Wednesday — as supply disruptions in Libya and attacks in the Middle East ratcheted up tensions in the key crude-producing region.

Global benchmark Brent rose toward $79 a barrel, while West Texas Intermediate was near $73. Protesters in Libya halted output from the OPEC producer’s Sharara and El-Feel fields, which together normally pump about 365,000 barrels a day.

Houthi militants claimed to have attacked another merchant ship in the Red Sea. That came as Iran said explosions that killed almost 100 people in the central part of the country were carried out to punish its stance against Israel, although the US said neither Israel nor itself were involved.

The recent flare-up of tensions in the Middle East, the source of about a third of the world’s crude, comes after the impact on the market from the Israel-Hamas war had remained largely contained. It’s threatening to reintroduce a conflict premium for oil, which fell by about a fifth last quarter as rising production from non-OPEC+ sources including the US outstripped demand.

The shutting of the Libyan oil field is price-supportive, but “the bigger concern and uncertainty for the market remains centered around tensions in the Middle East, particularly after the recent attack in Iran,” said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore. “While it is not clear who was behind the attack, it only adds to the growing tensions.”

The blasts near the grave of Iranian commander Qassem Soleimani left 95 people dead and 211 others injured on Wednesday, Iran’s health minister told state television. The attacks came a day after Israel was believed to be behind the killing of a key leader of the Iran-backed Hamas militant group in Lebanon’s capital, Beirut.

The Houthis said they targeted a vessel called the CMA CGM Tage, but French container giant CMA CGM SA said the ship didn’t suffer any incident. Numerous shipping lines are avoiding the Red Sea following a wave of attacks.

There could be a potential $3 to $4 a barrel boost to oil prices from a prolonged and full redirection of flows due to disruptions in the Red Sea, Goldman Sachs Group Inc. analysts including Daan Struyven said in a note. However, Brent crude should remain in a $70 to $90 a barrel range this year on elevated spare capacity and flexible supply from OPEC+, low recession risk, and opportunistic strategic-reserve purchases by China and the US, they said.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies reaffirmed their commitment to stabilizing the market in a statement on the OPEC website. The latest round of supply curbs decided on Nov. 30, amounting to roughly 900,000 barrels a day, take effect from this month through the end of the quarter.  – Bloomberg –