Brent crude price has increased by 0.3 per cent to $82 per barrel on Tuesday, January 30, 2024. Global crude oil prices as of 02:05 GMT+1, revealed that Brent was trading $82.65 per barrel.
In addition, the benchmark price for U.S. West Texas Intermediate crude futures (WTI) also showed in a rise of 0.4%, to $77.09 a barrel.
Although the contracts faced a substantial drop of over $1 on Monday, driven by escalating worries about Chinese demand in the face of an intensifying real estate crisis. The situation was exacerbated by a Hong Kong court’s directive to liquidate the prominent China Evergrande Group.
Meanwhile, analysts noted that the market is tense due to increasing concerns about oil supply, with Washington pledging to take “all necessary actions” in response to a deadly drone attack in Jordan by Iran-backed militants.
This incident marks the first U.S. military casualties since the start of the Israel-Gaza war.
Last week, it was reported that the U.S. initiated fresh strikes against Iran-aligned Houthi rebels in Yemen on Friday, responding to a Houthi assault on a Greek vessel in the Red Sea.
However, a Sunday’s attack by Iran-backed militants killed three U.S. troops in Jordan, while Qatar said it hoped U.S. retaliation would not damage regional security or undercut progress toward a new Gaza hostage-release deal.
Over the weekend, an assault on a Trafigura oil tanker in the Red Sea has heightened concerns about potential disruptions to the oil supply. ANZ analysts noted that the escalating risk of U.S. involvement in the conflict is adding to the overall uncertainty in the situation.
In the majority of 2023, Iran exported 1.2-1.6 million barrels of crude oil per day, making up 1-1.5% of the global oil supply.
“If U.S.-Iran tensions escalate, particularly through a direct confrontation, the risk rises that Iran’s oil supply is adversely impacted. Iranian’s oil exports are likely the most vulnerable via potentially greater enforcement of sanctions.
“How Iran responds to rising U.S. tensions will also dictate the course for oil markets. The key concern is Iran threatening a blockade of the Strait of Hormuz, which sees the transit of 15-20% of global oil supply,” said Commonwealth Bank of Australia analyst.
The increase in oil prices precedes an upcoming Federal Reserve rate decision, with the Federal Open Market Committee (FOMC) commencing a two-day meeting starting on Tuesday.
Policymakers are expected to hold interest rates steady, but some investors believe the U.S. central bank could drop its hiking bias.
The American Petroleum Institute industry group will publish U.S. stockpiles data on Tuesday at 4:30 pm EST (2130 GMT), while data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due at 10:30 a.m. EST (1530 GMT) on Wednesday.
