Oil prices firm as Middle East tensions heat up

The sun sets beyond an oil pumping unit, also known as a “nodding donkey” or pumping jack, at a drilling site operated by Tatneft OAO near Almetyevsk, Russia, on Friday, July 31, 2015.

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Oil prices rose nearly 1% on Thursday after Iran seized an oil tanker off the coast of Oman, raising the prospect of escalating conflict in the Middle East.

The West Texas Intermediate futures contract for February rose 65 cents, or .91%, to settle at $72.02 a barrel. The Brent futures contract for March gained 61 cents, or .79%, to settle at $77.41 a barrel.

Earlier in the session, both benchmarks were up over $2 a barrel but have pulled back on an unexpected increase in U.S. inflation and reports that China was seeking less Saudi imports.

Iran seized a tanker with Iraqi crude destined for Turkey in retaliation for the confiscation last year of the same vessel and its oil by the U.S.

The seizure of the Marshall Islands-flagged St Nikolas coincides with weeks of attacks by Yemen’s Iran-backed Houthi militias targeting Red Sea shipping routes.

Yemen-based Houthis this week mounted their largest attack yet on commercial shipping lanes in the Red Sea.

The U.S. and Britain hinted they would take further measures if the attacks continued. The U.N. Security Council passed a resolution demanding an immediate end to the Houthi strikes.

The group’s leader, Abdel-Malek al-Houthi, said any attack on the Houthis would not go without a response, noting any such response would be bigger than the recent strike in which its drones and missiles targeted a U.S. ship in the Red Sea.