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Brent crude futures rose $1.33, or 1.75%, to $77.45 a barrel at
1131 GMT, while U.S. West Texas Intermediate crude futures
gained $1.29, or 1.82%, to $72.06 a barrel.
Geopolitical tensions in the Middle East and an ongoing supply
outage in Libya offered support to prices on Tuesday, analysts
said.
"On the supply side, there are some bullish factors from the
closure of Libya's largest oilfield, which has affected around
0.3 million barrels per day of oil production," said Suvro
Sarkar, energy sector team lead at DBS Bank.
Some major shipping firms are still avoiding the Red Sea.
Germany's Hapag-Lloyd will continue to divert vessels around the
Cape of Good Hope in the wake of maritime attacks by Yemeni
Houthi militants, it said on Tuesday.
Regarding the Gaza war, the Israeli military has said its fight
against Hamas will continue through 2024, worrying markets that
the conflict could grow into a regional crisis that could
disrupt Middle Eastern oil supplies.
U.S. Secretary of State Antony Blinken told Israeli leaders
there was still a chance of winning acceptance from their Arab
neighbours if they create a path to a viable Palestinian state.
The oil benchmarks are rebounding from 3% and 4% losses incurred
on Monday respectively, following sharp cuts by top exporter
Saudi Arabia to its official selling prices (OSP).
"The question is whether the Saudi move of reducing OSPs to a
27-month low is also a sign of a potential increase in oil
supply implying serious discord within OPEC+," PVM analyst Tamas
Varga said.
On the demand side, German industrial production unexpectedly
fell in November according to the federal statistics office,
marking a sixth consecutive monthly decline.
Output fell by 0.7% after analysts polled by Reuters had
predicted a 0.2% rise.
In the U.S., Federal Reserve Governor Michelle Bowman on Monday
said she now sees U.S. monetary policy as "sufficiently
restrictive" and signalled her willingness to support eventual
interest-rate cuts as inflation eases.
Core inflation data on Thursday could offer fresh clues
regarding the fight against inflation, while the market is also
awaiting U.S. inventory data from the American Petroleum
Institute industry group due later on Tuesday.
(Reporting by Robert Harvey in London, Arathy Somasekhar in
Houston and Emily Chow in Singapore; editing by Jason Neely)
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