ALBAWABA - Oil prices jumped 2% on Tuesday, January 2nd, starting the new year on a high note. The focus shifted towards a potential disruption in supplies from the Middle East due to a naval conflict in the Red Sea. Additionally, expectations of economic stimulus in China, the world's largest crude oil importer, further boosted demand projections.
Brent crude rose $1.50, or 1.9%, to $78.56 per barrel. West Texas Intermediate (WTI) crude oil reached $72.94 per barrel, marking an increase of $1.30, or 1.8%.
The escalating risks of the conflict in Gaza turning into a wider regional conflict came to the forefront earlier in the week. This followed the repelling of an attack by Houthi militants on a Maersk container ship in the Red Sea by US helicopter aircraft on Sunday. According to accounts from US officials, Maersk, and the Houthis, the attack resulted in the sinking of three Houthi ships and the death of ten militants.
The widening scope of the conflict in Gaza could potentially lead to the closure of vital waterways for oil transportation, such as the Red Sea and the Strait of Hormuz in the Gulf. Such a closure could have a negative impact on oil supplies and increase tensions in the global oil market.
