© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. Picture taken November 22, 2019. REUTERS/Angus Mordant/File Photo
By Florence Tan
SINGAPORE (Reuters) -Oil 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.
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.
U.S. helicopters repelled an attack on Sunday by Iran-backed Houthi militants on a Maersk container vessel in the Red Sea, sinking three Houthi ships and killing 10 militants, fuelling risks of the Israel-Gaza war becoming a wider regional conflict.
“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 (LON:) 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.
A wider conflict could close crucial waterways for oil transport, such as the Red Sea and the Straits of Hormuz in the Gulf. After the naval battle, an Iranian warship sailed into the Red Sea, Iranian media said on Monday.
At least four tankers carrying diesel and jet fuel from the Middle East and India to Europe are sailing around Africa to avoid the Red Sea, ship tracking data show.
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.
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