Investing.com -- Oil prices settled at two-week highs Tuesday, as a rise in vessel attacks along a key Red Sea shipping route has stoked concerns of supply disruptions at a time and eased concerns somewhat of supply outstripping demand.
By 14:30 ET (19.30 GMT), the U.S. crude futures settled 1.3% higher at $73.44 a barrel and the Brent contract climbed 2% to $79.48 a barrel.
Red Sea attacks continue to stoke supply disruptions
Fears over disruptions to trade caused by a series of missile and drone attacks on ships in the Red Sea by the Iran-aligned Yemeni Houthi militant group continued to underpin oil prices following a 2% gain a day earlier.
The attacks have forced several major oil shippers to halt crude oil shipments through the Red Sea following attacks on ships in the region. Around 12% of world shipping traffic passes through the Suez Canal, heading mostly from the Mediterranean to the important Asian market.
U.S. to lead naval task force in Red Sea
The United States on Tuesday announced the creation of a multinational operation to safeguard Red Sea commerce, including countries such as the United Kingdom, France, Italy, Norway and Spain.
These attacks had prompted a number of shipping firms to say over the weekend that they would avoid the region, while oil giant BP (NYSE:BP) stated on Monday that it will pause all shipments through the Red Sea, "in light of the deteriorating security situation for shipping."
This saw markets begin once again pricing in a risk premium from the conflict, given that it now stood to potentially disrupt oil supplies from the region.
U.S. inventories data due
The crude market had started the new week with gains after Russia said on Sunday it would deepen oil export cuts in December by potentially 50,000 barrels per day or more.
The world's biggest exporters, led by Saudi Arabia and Russia, have been attempting to curb supply into the global market in an attempt to support oil prices.
The prospect of oversupplied markets in early-2024 recently pushed prices to near six-month lows, with underwhelming production cuts by the OPEC+ last time out, which were voluntary in nature, combined with monthly record U.S. production levels.
This puts the latest snapshot of U.S. supplies in focus, starting with the report from the American Petroleum Institute later in the session.
The industry body reported a draw of 2.35 million barrels last week, a larger decline than had been expected, but it also showed that gasoline inventories increased by 5.8 million barrels.
The official government inventory report is due on Wednesday.
(Peter Nurse, Ambar Warrick contributed to this article.)