Oil Prices Surge As Tension Grows In Middle East

Global oil prices recorded a surge on Thursday after an armed group hijacked an oil tanker in Oman, raising the possibility of increasing conflict in the Middle East.

As of 1:17 p.m. Thursday noon, Brent Crude futures increased by 1.74 per cent to $78.14 per barrel, while US West Intermediate crude futures experienced a gain of 1.84 per cent to $72.68 per barrel.

A report was received by the United Kingdom Maritime Trade Operations (UKMTO) authority on Thursday, stating that four to five armed persons boarded a vessel located approximately 50 nautical miles east of Oman’s coast. The Houthis, who are based in Yemen, launched their biggest assault yet on Red Sea commercial shipping channels the day before, while Israeli strikes in southern and central Gaza also intensified.

If the attacks persisted, the US and Britain made hints that they might act further. Meanwhile, the UN Security Council approved a resolution calling for an immediate cessation of the Houthi attacks.

As worries about demand in the biggest oil market in the world arose following an unexpected spike in US crude stockpiles, the oil benchmarks stayed lower on Wednesday.

Barclays said on Thursday that it was “feeling paranoid about oil prices” due to “slowing demand, unrest in the Middle East, and muted price reaction.” The bank also dropped its 2024 Brent projection by $8 to $85 a barrel.