Oil prices rose on Thursday after Israel rejected a ceasefire proposal from Hamas and on an unexpected drop in US fuel stocks.
Brent, the benchmark for two thirds of the world’s oil, was trading 1.36 per cent higher at $80.29 a barrel at 5.31pm UAE time.
West Texas Intermediate, the gauge that tracks US crude, was up 1.29 per cent at $74.81 a barrel.
Israeli Prime Minister Benjamin Netanyahu on Wednesday rejected Hamas's demands for a ceasefire and said the military would continue its offensive in Gaza until it achieved “absolute victory”.
“I believe continued military pressure is a necessary condition for releasing the hostages,” Mr Netanyahu told reporters.
“We are advancing step-by-step to absolute victory, and that requires absolute unity.”
The Gaza war and its escalation into the Red Sea have added to oil market volatility, although there has been no production disruption so far. The Middle East is responsible for roughly a third of the world’s crude supply.
Meanwhile, US crude stocks, an indicator of fuel demand, increased by 5.5 million barrels last week, according to the US Energy Information Administration (EIA).
However, distillate stocks fell by 3.2 million barrels and petroleum stocks dropped by 3.15 million barrels in the week that ended on February 2, EIA data showed.
Analysts were expecting distillate inventories to fall by a million barrels and gasoline stocks to increase by 140,000 barrels, according to Reuters.
Opec+ decided to keep its oil output policy unchanged at its meeting on February 1, but said it would “continue to closely assess market conditions” and stand ready “to take additional measures at any time”.
The group has 2.2 million barrels per day of voluntary production cuts in place until March, which is in addition to production cuts of 3.66 million bpd agreed earlier.
Swiss lender UBS expects Opec+ to extend the voluntary cuts to the middle of the year.
“We continue to see the oil market as slightly undersupplied and look for Brent to move into a $80 –$90 per barrel range over the coming months,” UBS said in a research note on Wednesday.
