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Oil prices surged higher on Tuesday amid escalating tensions in the Middle East and concerns over trade disruptions due to several international firms stopping to transit via the Red Seas following the attacks on ships.
Oil also found support from a weak dollar amid rising optimism the Federal Reserve will start cutting rates from early 2024 after data showed a bigger than expected slowdown in consumer price growth in November.
West Texas Intermediate Crude oil futures for February settled higher by $2.01 or about 2.7% at $75.57 a barrel.
Brent crude futures settled at $81.07 a barrel, gaining $2.00 or about 2.5%.
Yemen's Iran-backed Houthi militia claimed responsibility for a missile attack on Tuesday on a container ship in the Red Sea, and for an attempt to attack Israel with drones.
The Houthi group declared that ships owned or controlled by Israeli enterprises would be attacked in retaliation for Israel's attacks on the blockaded Gaza Strip.
Approximately 12% of global trade passes through the Suez Canal.
An Israeli minister reportedly hinted on Tuesday that the country had retaliated in Iraq, Yemen and Iran for attacks carried out against it as the war with Hamas-led militants in the Gaza Strip widens to other areas of the region and the Palestinian death toll continues to climb.
