Oil prices climb as Mideast tensions escalate

SINGAPORE — Oil prices climbed on Monday after a drone attack on US forces in Jordan added to worries over supply disruption in the Middle East as Houthi rebels stepped up their attacks on vessels in the Red Sea, hitting a Trafigura-operated fuel tanker.

Risks of a widening conflict comes as Russian refined product exports are set to fall, with several refineries under repair following drone attacks.

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. US West Texas Intermediate (WTI) 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 US 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 US 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 US 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.

Both contracts rose for a second week in a row and settled at their highest in nearly two months on Friday, supported by Middle East and Russian supply concerns while positive US economic growth and signs of Chinese stimulus boosted demand expectations.

Russia will likely cut exports of naphtha, a petrochemical feedstock, by some 127,500–136,000 barrels per day, or around a third of its total exports, after fires disrupted operations at refineries on the Baltic and Black Seas, according to traders and LSEG ship-tracking data.

On Feb. 1, leading ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, will meet online. —