Global oil benchmark Brent surged past $80 per barrel on Wednesday, driven by concerns over potential disruptions in global trade and escalating geopolitical tensions in the Middle East. The spike followed attacks on ships in the Red Sea by Yemen's Iran-aligned Houthi forces.

Brent crude futures rose 1.1 per cent to $80.12 a barrel, and US West Texas Intermediate crude climbed 1.3 per cent to $74.87 a barrel. The previous day saw both benchmarks closing up more than 1 per cent as companies rerouted vessels due to heightened tensions, impacting transport and insurance costs.

Greece advised commercial vessels to avoid Yemeni waters, given Greek ship-owners' significant control over about 20 per cent of the world's commercial vessels. The US initiated a task force to safeguard commerce in the region, but concerns persist as major maritime carriers continue to steer clear amid tensions.

The Houthi forces pledged to defy the US-led naval mission, maintaining their targeting of Red Sea shipping in support of Gaza's ruling Hamas movement. While oil supply routes have been adjusted, no shortages have emerged so far, with around 12 per cent of global shipping traffic passing through the Red Sea and the Suez Canal.

Despite the geopolitical factors driving oil prices, some analysts attribute the current price surge to a combination of rate cut expectations, falling bond yields, a weaker dollar, and positive developments in equity markets. Recent economic data, including falling German producer prices and a slowdown in euro zone inflation, also influenced market dynamics.

Traders are closely watching central bank actions to control inflation, with the possibility of interest rate cuts gaining traction. In the US, the Energy Department confirmed the purchase of 2.1 million barrels of crude for delivery in February, contributing to ongoing efforts to replenish reserves. However, US crude and fuel inventories rose last week, contrary to analysts' expectations of a decline.

(With Reuters inputs)