LONDON: Oil rose by about 1% on Thursday, extending gains on concerns over Middle Eastern supply after disruptions at an oilfield in Libya and heightened tensions relating to the Israel-Hamas war.

Local protests forced a production shutdown on Wednesday at Libya’s Sharara oilfield, which can produce up to 300,000 barrels per day (bpd). The field, one of Libya’s largest, has been a frequent target for political protests.

Brent crude rose 70 cents, or 0.9%, to $78.95 a barrel by 1148 GMT while U.S. West Texas Intermediate crude futures rallied 74 cents, or 1%, to $73.44.

“A confluence of headlines around further tensions in the Red Sea and a full shutdown of Libya’s Sharara oilfield from local protests have renewed concerns about global oil supply disruptions,” said Yeap Jun Rong, market strategist at IG.

Both benchmarks gained about 3% on Wednesday to settle higher for the for the first time in five days. Oil also found support from American Petroleum Institute data showing crude stocks fell by 7.4 million barrels, double the expected drawdown.

Oil climbs as supply concerns deepen with Libyan oilfield disruption

Though the API also reported rising product stocks, “it is likely that oil watchers will concentrate on the 7.4 million barrel draw in crude inventory because of Libya and the rekindled war premium”, said John Evans of oil broker PVM.

On Wednesday two explosions killed nearly 100 people and wounded scores at a ceremony in Iran to commemorate commander Qassem Soleimani, who was killed by a US drone in 2020. Iran has vowed revenge.

Shipping concerns in the Red Sea lingered after Yemen’s Iran-backed Houthis on Wednesday said they had “targeted” a container ship bound for Israel. US Central Command said the militant group had fired two anti-ship ballistic missiles in the southern Red Sea the previous day.

Official inventory figures from the US Energy Information Administration are due at 1600 GMT.