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Crude oil futures gained nearly 1% Thursday after Iran seized an oil tanker off the coast of Oman that has been at the center of a dispute with the U.S.
The seizure follows weeks of attacks by Yemen’s Iran-backed Houthi militias targeting Red Sea shipping routes, launched in the wake of the start of the Israel-Hamas war in October.
The Oman incident is away from the Red Sea but signals that tensions in the Middle East are high, analysts said.
Front-month Nymex crude (CL1:COM) for February delivery finished +0.9% to $72.02/bbl, and front-month March Brent crude (CO1:COM) closed +0.8% to $77.41/bbl.
U.S. gasoline and diesel futures led energy markets, with February gasoline (XB1:COM) settling +2.3% to $2.11/gal and February ULSD (HO1:COM) +2.8% to $2.67/gal, on forecasts for extreme cold across much of the U.S. next week.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UGA)
Energy was one of just two of the 11 S&P stock market sectors to post a gain, +0.3%, led by Valero Energy (VLO), +2.6%, which was added to Raymond James’ Analyst Current Favorites list.
Oil was higher even as U.S. data showed consumer inflation rose by a higher than forecast 3.4% in December on an annualized basis, which could delay an expected interest rate cut in March from the U.S. Federal Reserve.
“Given that markets have continued to price in rate cuts in March, a delay of the currently anticipated timeline would dampen investor sentiment, likely bringing [crude] price declines with it,” consultant Gelber and Associates said.
“Slowing demand, unrest in Middle East and muted price reaction have producers, consumers and market participants alike feeling paranoid about oil prices,” Barclays said in lowering its 2024 Brent forecast by $8 to $85/bbl.
