Oil prices rose over $1 today as US Secretary of State Antony Blinken prepared to visit the Middle East in an attempt to contain flaring regional tensions as the Israel-Hamas conflict rages.
Brent crude futures were up $1.34, or 1.7%, at $78.93 a barrel, while US West Texas Intermediate crude futures rose $1.62, or 2.2%, to $72.81 this afternoon.
Both benchmarks are on track to end the first week of the year higher, having almost recouped their losses from yesterday triggered by hefty increases in US 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 said today it will divert all vessels away from the Red Sea for the foreseeable future, warning customers of disruptions.
Israeli forces plan a more targeted approach in Gaza's north and further pursuit of Hamas leaders in the south, its defence minister said yesterday.
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 today.
Investors also watched macroeconomic data for indications of when interest rate cuts might commence, as lower borrowing cuts can spur economic growth and bring 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 minutes from the US Federal Reserve meeting in December gave a growing sense that inflation is under control and raised concern about the risks that an "overly restrictive" monetary policy may hold for the economy.
Still, official data today showing US employers hired more workers than expected in December and raised wages, potentially dampening expectations of the Fed promptly cutting interest rates
