Skip to main content

Crude oil, a pivotal commodity in the energy and automotive sectors, witnessed a substantial price increase on January 3, underscoring its continued dominance despite the global shift towards renewable energy and electric vehicles (EV).

The oil market, highly sensitive to global geopolitical events, saw Brent crude climb 1% to $79.03 per barrel, while U.S. West Texas Intermediate crude futures rose by 1.53% to $73.81.

Both benchmarks registered a 3% increase on Wednesday, their first gain in five days, with West Texas Intermediate marking its most significant daily percentage gain since mid-November.

Factors Driving Oil Price Increase

The surge in oil prices is attributed to concerns over supply disruptions in the Middle East due to issues at a Libyan oilfield and escalating tensions in the Israel-Gaza conflict.

Production at Libya’s Sharara oilfield, capable of producing up to 300,000 barrels per day and among the country’s largest, was completely halted on Wednesday following local protests. The field has been a frequent target of political unrest in the region.

Additional concerns arose regarding maritime safety in the Red Sea following claims by Yemen’s Iran-backed Houthis of targeting an Israel-bound container ship. The U.S. Central Command also reported that the militant group launched two anti-ship ballistic missiles in the southern Red Sea.

These supply and production concerns directly impact U.S. crude oil reserves, subsequently influencing global oil prices. Despite advancements in alternative energy sources, crude oil continues to play a crucial role in the world’s industrial landscape.