Oil extends gains on Middle East supply worries

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

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 92 cents, or 1.2%, to $79.17 a barrel by 0908 GMT, while U.S. West Texas Intermediate crude futures rallied 93 cents, 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 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.