SINGAPORE (Reuters) – Oil prices climbed in early Asia trade on Monday, supported by tensions within the Middle East following a drone attack in Iran and as Beijing pledged over the weekend to advertise a consumption recovery which might support fuel demand.
Brent crude futures rose 54 cents, or 0.6%, to $87.20 a barrel by 0115 GMT while U.S. West Texas Intermediate crude was at $80.22 a barrel, up 54 cents, or 0.7%.
Israel appears to have been behind an overnight drone attack on a military factory in Iran, a U.S. official said on Sunday.
“It isn’t really clear yet what’s happening in Iran, but any escalation there has the potential to disrupt crude flow,” said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore.
Ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known collectively as OPEC+, are unlikely to tweak its current oil output policy once they meet virtually on Feb. 1.
Still, indication of an increase in crude exports from Russia’s Baltic ports in early February caused Brent and WTI to post their first weekly loss in three last week.
On Saturday, China’s cabinet said it might promote a consumption recovery as the most important driver of the economy and boost imports, state broadcaster CCTV reported.
“We now have Russia on the availability side and China on the demand side. Each can swing by greater than 1 million barrels per day above or below expectation,” said Grasso, formerly an oil trader with Italy’s Eni.
“China seems to have surprised the market when it comes to how briskly they’re coming out of zero COVID while Russia has surprised when it comes to resilience of export volume despite the sanctions.”
China resumes business this week after its Lunar Recent 12 months holidays. The variety of passengers travelling prior to the vacations rose above levels up to now two years but remains to be below 2019, Citi analysts said in a note, citing data from the Ministry of Transport.
“Overall international traffic recovery stays gradual, with high-single to low-teens digits to 2019 level, and we expect further recovery when outbound tour group travel resumes on Feb. 6,” the Citi note said.
(Reporting by Florence Tan; Editing by Muralikumar Anantharaman)
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