Oil prices jump in the first session of the New Year

il prices jumped in the first session of the New Year, boosted by the chances of Middle East supply disruptions after a naval clash in the Red Sea, as well as hopes of strong holiday demand and an economic stimulus in China, the top importer of crude, Reuters reported.

Brent crude rose $1.28, or 1.7%, to $78.32 a barrel by 0438 GMT while U.S. West Texas Intermediate crude was at $72.69 a barrel, up $1.04, or 1.5%.

A Reuters survey of economists and analysts predicted Brent crude would average $82.56 a barrel this year, slightly higher than the 2023 average of $82.17, as weak global growth is expected to cap demand, though geopolitical tensions could provide support.

“The oil price may be affected by the escalation … in the Red Sea over the weekend and the peak demand season during China’s Spring Festival,” said Leon Li, a Shanghai-based CMC Markets analyst said.

Li, who was referring to the Lunar New Year holiday due in early February, added that the forecast Chinese holiday demand was also raising expectations for a price rebound this month.

In China, investors’ expectations for fresh stimulus measures rose after manufacturing activity shrank for a third month in December, government data showed on Sunday.

A stimulus could give a fillip to economic growth, potentially boosting oil demand, and lend support to prices.