Global oil prices continued their upward trajectory on Thursday, building on significant gains from the previous session.
Persistent worries over disruptions in Middle Eastern supply, fueled by incidents in Libya and escalating tensions around the Israel-Gaza conflict, have contributed to the surge.
Brent crude, the international benchmark, saw an increase of 38 cents, or 0.5%, reaching $78.63 a barrel by 0440 GMT. Simultaneously, U.S. West Texas Intermediate (WTI) crude futures rose by 52 cents, or 0.7%, to $73.22.
Concerns raised by Libya's Sharara oilfield shutdown
On Wednesday, protests forced a complete shutdown of production at Libya's Sharara oilfield, capable of producing up to 300,000 barrels per day.
This shutdown, resulting from local unrest, reignited worries about potential disruptions to global oil supply.
Heightened geopolitical tensions were exacerbated by the killing of Hamas' deputy leader in a strike in Beirut. The incident marked the first strike in the Lebanese capital in almost three months of near-daily clashes between the Israeli military and Iran-backed Hezbollah along the border region.
Further complicating the situation, Yemen's Iran-backed Houthis claimed to have "targeted" a container ship bound for Israel in the Red Sea. The U.S. Central Command reported that the militant group had fired two anti-ship ballistic missiles in the southern Red Sea.
API Data about U.S. crude stocks
Supporting the bullish market sentiment, data from the American Petroleum Institute (API) revealed a substantial 7.4 million barrel decline in U.S. crude stocks for the week ending Dec. 29. This figure doubled the drawdown predicted by analysts polled by Reuters.
OPEC+ cooperation to continue
In addition to the geopolitical factors, the Organization of the Petroleum Exporting Countries (OPEC) confirmed on Wednesday that cooperation and dialogue within the wider OPEC+ producer alliance would persist. This affirmation came after Angola, an OPEC member, announced its decision to exit the bloc last month.
A meeting of the OPEC+ group is scheduled for Feb. 1 to review the implementation of the latest oil output cut.
Analysts at Goldman Sachs foresee Brent crude prices fluctuating between $70 and $90 a barrel in 2024. Their projections take into account flexible OPEC+ supply, a low risk of recession, and strategic petroleum reserve purchases by major players, including China and the United States.
The oil market remains dynamic as it navigates through a complex web of geopolitical tensions, supply disruptions, and strategic considerations, setting the stage for a challenging and uncertain year ahead.
