After disruptions of a Libyan field and growing tensions surrounding the Israel and Gaza conflict, worries about Middle East supply continued to drive up oil prices on Thursday, building on strong gains in the previous trading session.
By 0730 GMT, US West Texas Intermediate crude futures had increased 66 cents to $73.36, while Brent crude had gained 53 cents to $78.78 per barrel.
For the very first time within five days, both benchmarks saw a 3% increase to close higher on Wednesday, with WTI posting the largest daily percentage increase since mid-November.
The disruption of the world's oil supply has come back into focus due to a combination of headlines about increased Red Sea tensions and the complete closure of Sharara oilfield in Libya due to local protests, according to Yeap Jun Rong, a market strategist from IG.
The Sharara oilfield in Libya, which has a daily production capacity of a maximum of 300,000 barrels, was forced to completely shut down operations on Wednesday due to local protests. The field is one of the biggest in Libya, often at the center of both local and national political protests.
The deputy leader of Hamas was assassinated earlier on Tuesday in Beirut. This was the first attack on the capital of Lebanon in nearly three months, during which there had been almost daily gunfire between the Israel and Hezbollah backed by Iran that had been restricted to the border area.
The Houthis of Yemen, who are supported by Iran, claimed on Wednesday that they attacked a container ship that was headed for Israel, raising shipping concerns in the Red Sea. The militant group launched two anti-ship missiles in the Red Sea the day prior to that, according to US Central Command.
Additionally bolstering the market was the information from the Petroleum Institute, which showed that US crude stocks dropped by 7.4 million barrels during the week ending December 29, double the amount of declines predicted by analysts.
The US Department of Energy's statistical arm, the Energy Information Administration, releases weekly data at 11:00 a.m. on Thursday. Because of the New Year's vacation on Monday, the data is postponed by one day.
At the same time, following Angola's announcement last month that it would be leaving OPEC, the oil producer alliance announced on Wednesday that communication and cooperation within the larger OPEC+ will continue.
The group has scheduled a meeting for February 1st to discuss the execution of its most recent reduction in oil production.
Goldman Sachs analysts predict that Brent will trade between $70 and $90 per barrel in 2024 due to flexible supply from OPEC+, a low probability of a recession, and strategic petroleum purchases by the United States and China.
The analysts stated in a client note dated January 3 that geopolitical risk will continue to be a major upside risk to the prediction.