Despite the actions to shift towards green energy resources, renewable energy, and electric vehicles (EV), crude oil remains the commodity that dictates the energy and vehicle sector by a considerable margin.
Being a commodity highly susceptible to geopolitical events, it is no wonder that oil prices can fluctuate by large margins in a matter of days, which is why it added over 3% to its value on January 3.
At the time of writing, Brent crude climbed by 1% to reach $79.03 per barrel, and U.S. West Texas Intermediate crude futures increased by 1.53% to reach $73.81.
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Both benchmarks experienced a 3% uptick on Wednesday, marking the first rise in five days. West Texas Intermediate recorded its most significant daily percentage gain since mid-November.
Reasons for oil’s gain in value
Ongoing worries about the Middle Eastern oil supply due to disturbances in a Libyan field and increased tensions surrounding the Israel-Gaza conflict have impacted the energy market.
Local demonstrations on Wednesday led to the complete cessation of production at Libya’s Sharara oilfield, which can generate up to 300,000 barrels per day. Among Libya’s largest, this sizable field has become a focal point for local and broader political protests.
Elsewhere, worries regarding shipping in the Red Sea persisted following an announcement on Wednesday by Yemen’s Iran-backed Houthis claiming to have “targeted” a container ship destined for Israel. U.S. Central Command reported that the militant group had launched two anti-ship ballistic missiles in the southern Red Sea the day before.
Concerns over production and supply are bound to immediately impact crude oil reserves in the U.S. and consequently impact the prices, as this commodity remains the driving necessity in the world’s industry.
