Oil Prices Climb Amid Middle East Tensions, Offsetting Economic Concerns

Oil prices increased for a second consecutive day on Wednesday, driven by concerns over Middle East supply disruptions due to the Israel-Hamas conflict and the closure of a major Libyan oilfield. These factors outweighed apprehensions about growing U.S. oil production and concerns regarding sluggish economic growth.

Despite the efforts of the Organization of the Petroleum Exporting Countries (OPEC) and its allies to curb production and stabilize the market, the Energy Information Administration reported on Tuesday that U.S. crude production is expected to reach a record high in 2024.

As of 12:59 GMT, Brent crude futures experienced a rise of 38 cents, equivalent to 0.5%, reaching $77.97 per barrel. Earlier, these futures had dipped to as low as $77.00. Concurrently, U.S. West Texas Intermediate crude futures saw an increase of 32 cents, representing a 0.4% uptick, reaching $72.56 per barrel.

“The first few weeks of trading in a new calendar year often produces this choppy price action,” said Ole Hansen of Saxo Bank.

“While supply disruptions remain an unrealized threat, the physical market is showing signs of actual weakness, reducing the geopolitical risk impact,” he added.