Brent inches up on escalating tensions in the Middle East

The front-month ICE Brent contract gained $0.48/bbl on the day, to trade at $78.53/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Growing conflict in the Middle East has continued to put upward pressure on Brent futures.

The Iran-aligned Houthi militants fired an anti-ship ballistic missile yesterday, hitting a US-operated dry bulk carrier, US Central Command (CENTCOM) said. The Yemeni militant group continue to target commercial vessels in the Red Sea, despite the recent US-led coalition retaliatory airstrikes in Houthi targets in Yemen.

The US and British military forces last week conducted a series of airstrikes on Houthi bases in Yemen.  

“The military advises ships to avoid Bab El-Mandeb straight,” said Price Futures Group’s senior market analyst Phil Flynn.

Downward pressure:

Some downward pressures acting on Brent’s price this week come from weak oil demand projections in China.

Oil demand in China has been weak due to less travel activity during the winter season. The country’s gasoline and diesel consumption declined in December 2023 as driving activity slowed due to falling temperatures.

The slowdown in construction and industrial activities in December, caused by cold weather conditions, also resulted in reduced diesel consumption in China last month, market intelligence provider JLC reported.

By Aparupa Mazumder

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