Oil rose, following its biggest weekly drop since October, as the US vowed more strikes against Iran’s forces and its proxies in the Middle East and Houthis in Yemen promised to retaliate against bombardments over the weekend.
Brent crude climbed to near $78 a barrel after declining by 7.4% last week, with US counterpart West Texas Intermediate under $73. American forces launched attacks against the Houthis over the weekend after earlier hitting Iranian troops and militias in Syria and Iraq.
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The weekend’s bombardments marked the biggest targeting of the Houthis since an initial operation on Jan. 11 as part of an effort to end attacks on commercial ships in the Red Sea. Despite the warning of further strikes, senior US officials said the country wouldn’t be pulled into a prolonged regional conflict. A stronger dollar is also making oil more expensive for many investors.
Crude slumped last week — erasing almost all of this year’s gains — amid talks to pause the four-month Israel-Hamas conflict, although US National Security Advisor Jake Sullivan said on Sunday that an agreement isn’t imminent. There are also signs of robust supply as OPEC output remains above the collective limit and the US produces record amounts.
“Given the US military strikes avoid directly attacking Iran, we think the Israel‑Hamas cease-fire talks will have the more dominant effect,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia. “This will keep Brent oil futures under $80 a barrel as markets pay more attention to oversupply risks in coming quarters.” – Bloomberg
