Oil prices rise on disruption fears after latest Red Sea attack

By Noah Browning

LONDON (Reuters) -Oil prices rose in the first session of the new year, boosted by potential disruption to Middle Eastern supply after the latest attack on a container ship in the Red Sea, and by Chinese demand hopes.

was up 49 cents, or 0.6%, to $77.53 a barrel at 1432 GMT. U.S. West Texas Intermediate crude was up 36 cents, or 0.5%, at $72.01, after both benchmarks gained around $2 in earlier trading.

A Reuters survey of economists and analysts predicted that Brent crude would average $82.56 a barrel this year, up slightly from the 2023 average of $82.17, with weak global growth expected to cap demand. Geopolitical tensions, however, could provide price support.

U.S. helicopters on Sunday repelled an attack by Iran-backed Houthi forces on a Maersk container vessel in the Red Sea, sinking three Houthi vessels and killing 10 of the militants, fuelling risks of the Israel-Hamas war becoming a wider conflict.

Danish shipper Maersk said it would decide on Tuesday whether to resume sending vessels through the Suez Canal via the Red Sea or redirect them around Africa after the attack, a company spokesperson said.

“Major drivers will continue to be geopolitics and the extent of economic growth,” John Paisie, president of Stratas Advisors, said of oil prices for the coming year.

“The Israeli-Hamas has the potential to escalate and expand – and to increase the risk premium.”

A wider conflict could close crucial waterways for oil transportation.

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 shows.

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

Any such stimulus could boost oil demand and support crude prices.