Oil still on the up amid jitters over Middle East supply

London — Oil rose more than 1% on Thursday, adding to gains in the previous session on concerns over Middle Eastern supply after disruptions at an oilfield in Libya and heightened tensions over the Israel-Hamas war.

On Wednesday, local protests forced a production shutdown at Libya’s Sharara oilfield, which can produce up to 300,000 barrels per day. The field, one of Libya’s largest, has been a frequent target for local and broader political protests.

Brent crude rose 92c, or 1.2%, to $79.17 a barrel by 0908 GMT, while US West Texas Intermediate crude futures rallied 93c, or 1.3%, to $73.63.

“A confluence of headlines around further tensions in the Red Sea and a full shutdown of Libya’s Sharara oilfield from local protests have renewed concerns about global oil supply disruptions,” said Yeap Jun Rong, market strategist at IG.

On Wednesday both benchmarks gained around 3% to settle higher for the first time in five days. Oil also found support from American Petroleum Institute data showing crude stocks fell by 7.4-million barrels, double the expected drawdown.

Although the API also reported rising product stocks, “it is likely that oil watchers will concentrate on the 7.4-million-barrel draw in crude inventory because of Libya and the rekindled war premium”, said John Evans of oil broker PVM.

On Wednesday, two explosions killed nearly 100 people and wounded scores at a ceremony in Iran to commemorate Revolutionary Guards commander Qassem Soleimani who was killed by a US drone in 2020. Iran has vowed revenge.

Shipping concerns in the Red Sea lingered after Yemen’s Iran-backed Houthis said on Wednesday they had targeted a container ship bound for Israel. The US armed forces Central Command said the militant group had fired two antiship ballistic missiles in the southern Red Sea the previous day.

Official inventory figures from the Energy Information Administration are out at 1600 GMT.

Reuters