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Investing.com -- Oil prices rose Wednesday to two-week highs on increased concerns that geopolitical tensions in the Red Sea will result in disruptions to global crude supply.
By 09:15 ET (14.15 GMT), the U.S. crude futures traded 1.4% higher at $74.99 a barrel and the Brent contract climbed 1.3% to $80.23 a barrel.
Greece advises tankers to avoid Yemeni waters
Both benchmarks have surged higher this week on concerns missile and drone attacks on ships in the Red Sea by the Iran-aligned Yemeni Houthi militant group will result in a major disruption to the global supply of crude.
Around 12% of world shipping traffic passes through the Suez Canal, heading mostly from the Mediterranean to the important Asian market.
These fears were exacerbated Wednesday after Greece advised commercial vessels sailing in the region to avoid Yemeni waters. Greek ship-owners control about 20% of the world's commercial vessels in terms of carrying capacity.
The United States has announced the creation of a multinational naval task force to defend commerce in the region, but the Houthis have vowed to continue their attacks, which they claim is in support of the Palestinians in Gaza.
U.S. inventories grew last week - API
These worries have put a risk premium back into the crude market, and this has overshadowed data from the American Petroleum Institute showing that U.S. crude inventories unexpectedly rose in the week to Dec 15.
API data showed that stockpiles grew 0.9 million barrels, flipping expectations for a draw of 2.2 million barrels.
The reading indicated that U.S. supplies remain heavy going into 2024, as U.S. production reached record-high levels to fill an output gap left by the Organization of Petroleum Exporting Countries.
The official inventory data from the Energy Information Administration is due later on Wednesday, and is likely to shed more light on U.S. fuel demand and refinery output going into the end of 2023.
The U.S. bought 2.1 million barrels of crude for delivery in February, its Energy Department said on Tuesday, as the country continues to replenish its reserves.
European inflation cools
The market also received a boost Wednesday as inflation data fell more than expected in Germany, in the form of producer prices, while British inflation plunged in November to its lowest rate in over two years.
Evidence that inflation is cooling in Europe has raised expectations that the European Central Bank, as well as the Bank of England, will start cutting interest rates early next year, potentially boosting economic activity and thus the demand for crude.
(Ambar Warrick contributed to this article.)
