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Business News/ Markets / Stock Markets/  Oil prices up $2 on supply disruption fears after latest Red Sea attack; Brent over $77/bbl
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Oil prices up $2 on supply disruption fears after latest Red Sea attack; Brent over $77/bbl

Both crude oil benchmarks gained around $2 in earlier trading over Red Sea attacks. Analysts predict that Brent crude would average $82.56 a barrel this year.

India increased imports of Saudi oil in December as payment problems drove its Russian oil buys to an 11-month low. (Picture Credits: ONGC official website)Premium
India increased imports of Saudi oil in December as payment problems drove its Russian oil buys to an 11-month low. (Picture Credits: ONGC official website)

Oil prices rose in the first session of the new year, boosted by potential disruption to Middle Eastern supply after the latest attack on a container ship in the Red Sea, and by demand hopes in China. Also, India increased imports of Saudi oil in December as payment problems drove its Russian oil buys to an 11-month low.

Brent crude was up 49 cents, or 0.6 per cent, to $77.53 a barrel. US West Texas Intermediate crude was up 36 cents, or 0.5 per cent, at $72.01, after both benchmarks gained around $2 in earlier trading, according to news agency Reuters.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a January 19 expiry, was last trading 1.41 per cent higher at 5,942 per bbl, having swung between 5,935 and 6,148 per bbl during the session, against a previous close of 6,027 per barrel.

Also Read: India increases oil imports from Saudi as Russian purchases fall to 11-month low in December

What's driving crude oil prices?

-A Reuters survey of economists and analysts predicted that Brent crude would average $82.56 a barrel this year, up slightly from the 2023 average of $82.17, with weak global growth expected to cap demand. Geopolitical tensions, however, could provide price support.

-US helicopters on Sunday repelled an attack by Iran-backed Houthi forces on a Maersk container vessel in the Red Sea, sinking three Houthi vessels and killing 10 of the militants, fuelling risks of the Israel-Hamas war becoming a wider conflict.

-Danish shipper Maersk said it would decide on Tuesday whether to resume sending vessels through the Suez Canal via the Red Sea or redirect them around Africa after the attack, said a company spokesperson, according to Reuters.

Also Read: Outlook 2024: Oil to hover between $80-$90/barrel in 2024; OPEC+ to dictate trends, say experts

-A wider conflict could close crucial waterways for oil transportation. At least four tankers carrying diesel and jet fuel from the Middle East and India to Europe are sailing around Africa to avoid the Red Sea, as per ship tracking data.

-In China, investor expectations of fresh economic stimulus measures rose after manufacturing activity shrank for a third month in December, government data showed on Sunday. Any such stimulus could boost oil demand and support crude prices. 

-India's oil imports from Russia in December declined between 16 per cent and 22 per cent, according to Reuters. Indian Oil Corp, which was set to get the Sokol oil, had to withdraw from its inventory and buy from the Middle East to make up the shortfall. The imports of Saudi oil however, rose by 4 per cent.

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Published: 02 Jan 2024, 10:03 PM IST
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