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Brent crude rose $1.72, or 2.2%, to $78.76 a barrel by 1115 GMT.
U.S. West Texas Intermediate crude was up $1.57, or 2.2%, at
$73.22.
A Reuters survey of economists and analysts predicted that Brent
crude would average $82.56 a barrel this year, up slightly from
the 2023 average of $82.17, with weak global growth expected to
cap demand. Geopolitical tensions, however, could provide price
support.
U.S. helicopters on Sunday repelled an attack by Iran-backed
Houthi forces on a Maersk container vessel in the Red Sea,
sinking three Houthi vessels and killing 10 of the militants,
fuelling risks of the Israel-Hamas war becoming a wider
conflict.
"The oil price may be affected by the escalation ... in the Red
Sea over the weekend and the peak demand season during China's
spring festival," said Shanghai-based CMC Markets analyst Leon
Li, referring to the Lunar New Year holiday in early February.
A wider conflict could close crucial waterways for oil
transportation.
At least four tankers carrying diesel and jet fuel from the
Middle East and India to Europe are sailing around Africa to
avoid the Red Sea, ship tracking data shows.
In China, investor expectations of fresh economic stimulus
measures rose after manufacturing activity shrank for a third
month in December, government data showed on Sunday.
Any such stimulus for economic growth could boost oil demand and
support crude prices.
(Reporting by Noah BrowningAdditional reporting by Florence Tan
and Sudarshan VaradhanEditing by David Goodman)
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