Oil Prices Rise As Middle East Tensions Increase

Oil prices increased on Monday after a drone attack on U.S. forces in Jordan added to worries over supply disruption in the Middle East

This is as Houthi rebels stepped up their attacks on vessels in the Red Sea, hitting a Trafigura-operated fuel tanker.

Russian exports of refined products are expected to decline, and some refineries are undergoing repairs as a result of drone attacks, raising the possibility of a growing conflict.

Brent crude futures rose 29 cents, or 0.4%, to $83.84 a barrel by 0230 GMT after hitting a session-high of $84.80. U.S. West Texas Intermediate crude gained 34 cents, or 0.4%, to $78.35 a barrel after reaching an intraday high of $79.29 earlier in the session.

The attack on U.S. troops in a drone strike in Jordan raised concerns of a wider conflict in the oil-rich Middle East.

“We believe the death of three U.S. service members today in Jordan marks a critical inflection point in the ongoing conflict in the Middle East and raises a specter of a more substantial U.S. involvement in the war,” RBC Capital analyst Helima Croft said in a note, adding that a more direct confrontation with Iran raises the specter of regional energy supply disruptions.

Commodities trader Trafigura said on Saturday it was assessing the security risks of further Red Sea voyages after firefighters put out a blaze on a tanker attacked by Yemen’s Houthi group a day earlier.

“Disruptions to supply have been limited, but that changed on Friday after an oil tanker operating on behalf of Trafigura was hit by a missile off the coast of Yemen,” ANZ analysts said in a note.

“With oil tankers linked to the U.S. and UK now under threat of attack, the market is likely to reprice the risk of disruptions.”

Chioma Kalu

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