Oil climbs as tensions escalate in Middle East

Crude Oil prices at 8-week high as missile hits trafigura-operated fuel tanker in the Red Sea.

By Ahmed Azzam | @3zzamous | 29 January 2024

Market open
  • WTI crude hits $79/barrel on Red Sea attack

  • Oil market eyes Saudi Minister's remarks

Oil prices surge on supply disruptions concern

On Monday, WTI crude futures surged toward $79 per barrel, marking the highest levels in two months. The catalyst for this upward momentum was an attack on a Transfigura-operated fuel tanker in the Red Sea, intensifying fears of supply disruptions. The incident, where the tanker was hit by a missile off the coast of Yemen, prompted commodities trader Transfigura to reassess the security risks associated with further Red Sea voyages.

Concerns about supply disruptions were exacerbated by drone attacks impacting Russian refineries, leading to an expected decline in refined products exports. On the demand side, the outlook received a boost from stronger-than-expected U.S. economic data and fresh stimulus measures in China, two of the largest oil-consuming nations.

As the oil market closely watches these developments, the focus turns to the upcoming online meeting of OPEC and its allies on February 1. While no immediate decisions on output policy are anticipated, the gathering will provide insights into the collective stance of major oil-producing nations. Additionally, all eyes are on Saudi Energy Minister Prince Abdulaziz bin Salman's remarks at the Baker Hughes annual meeting, which will undoubtedly shape market sentiment in the short term.