LONDON: Oil prices rose on Friday as U.S. Secretary of State Antony Blinken prepared to visit the Middle East in an attempt to prevent the Israel-Hamas conflict from widening.
Brent crude futures were up 46 cents, or 0.59%, to $78.05 a barrel, while U.S. West Texas Intermediate crude futures rose 64 cents, or 0.89%, to $72.83 at 1235 GMT.
At its intra-day peak, the WTI futures contract traded more than $1 above its previous close.
Both benchmarks are on track to end the first week of the year higher, having almost recouped their losses from Thursday after hefty builds in U.S. gasoline and distillate stocks.
The price rebound serves as “a reminder of the risk that is rooted in ever-growing tension in the Middle East,” PVM analyst Tamas Varga said in a note.
Maersk announced it will divert all vessels away from the Red Sea for the foreseeable future, warning customers of disruptions.
Oil prices gain on supply concerns
Israeli forces plan a more targeted approach in the north and further pursuit of Hamas leaders in the south, its defence minister said on Thursday.
As the threat of the conflict expanding persists, Blinken was set to travel to the Middle East for a week of diplomacy, the State Department said.
The risk of escalation on the border between Israel and Lebanon is “unfortunately very real”, a German foreign ministry spokesperson said on Friday.
Investors also watched macroeconomic data for indications of when interest rate cuts might commence, as lower borrowing cuts can spur economic growth and translate to higher oil demand.
Euro zone inflation rose in December and could continue rising in early 2024, which would ease pressure on the European Central Bank to start cutting rates.
The latest U.S. Federal Reserve meeting on Thursday gave a growing sense that inflation is under control and rising concern about the risks that an “overly restrictive” monetary policy may hold for the economy.
Investors will also be looking ahead to U.S. payroll and unemployment data due at 1330 GMT.
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