Oil prices rose nearly $2 on Tuesday after falling in the previous session as markets balanced the impact of tensions in the Middle East, on the other hand, concerns over demand and increased OPEC supply.
Analysts explained that geopolitical tensions in the Middle East and supply constraints in Libya supported Tuesday's rise in prices.
On the supply side, there are factors that have pushed up prices, including the shutdown of Libya's largest oil field, which affected oil production by about 0.3 million barrels per day, said Suvroo Sarkar, head of DBS Bank's energy sector group.
Some major shipping companies are still avoiding the Red Sea. German company Hapag-Lloyd said on Tuesday it was diverting ships around the Cape of Good Hope after naval attacks launched by the Houthis.
In a related context, the Saudi Arabian Council of Ministers, in a statement issued on Tuesday, praised the commitment of oil producing countries outside the Organization of the Petroleum Exporting Countries (OPEC) to unity, full integration and market stability.
The statement emphasized the Kingdom's interest in supporting efforts aimed at improving the stability and balance of oil markets.
Oil prices recovered from losses of 3% and 4% on Monday, respectively, after Saudi Arabia sharply cut official selling prices.
On the demand side, German industrial production unexpectedly fell in November, with the Federal Statistics Office reporting a sixth straight month of declines, and output fell 0.7% after analysts polled by Reuters had expected a 0.2% rise.
In the US, Michelle Bowman, a member of the Federal Reserve Board of Governors, said on Monday that she sees US monetary policy as “sufficiently restrictive” and that she is willing to support eventual cuts in interest rates as inflation eases.
Key inflation data released on Thursday could provide fresh clues on the fight against inflation, while the market awaits U.S. inventory data from the American Petroleum Institute industry group later on Tuesday.
Brent crude futures were up $1.66, or 2.19%, at $77.81 a barrel by 13:02 GMT, while US West Texas Intermediate crude futures were up $1.73, or 2.44%, at $72.49 a barrel.
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