Crude Oil Hits November Highs Following Merchant Ship Attack

Oil rallied to the highest price in two months after a fuel tanker was struck near Yemen, underscoring the geopolitical risks to crude supplies.

West Texas Intermediate rose to top $78 a barrel, the highest price since November.

The ship operating on behalf of trading giant Trafigura Group was hit by a missile about 55 miles southeast of Aden, Yemen.

Futures for refined products, including diesel and gasoline, also jumped to two-month highs.

Crude climbed more than 6% this week — the biggest gain since the week after the start of the Israel-Hamas war — as positive fundamental news and a push from trading algorithms helped futures surpass key technical levels.

Still, the US benchmark settled overbought on its nine-day relative strength index, suggesting the surge may have been overdone.

Crude’s advance has been underpinned by elevated tensions in the Middle East, with the US striking Iran-backed Houthi rebels in Yemen to force them to halt attacks on commercial shipping in the Red Sea.

Elsewhere, drone attacks on refineries in Russia endangered crude flows as the war in Ukraine drags on.

Oil has gained more than 8% in January, with additional support from an unexpectedly large drawdown in US inventories and efforts by Chinese policymakers to shore up the economy.

Still, many traders remain cautious given prospects for robust supplies from non-OPEC producers, as well as slower demand growth in major importers, including India.