Investing.com - Oil prices rallied sharply on Tuesday, after Turkish fighter jets shot down a Russian warplane near the Syrian border, fueling concerns over a disruption to supplies from the Middle East.
On the ICE Futures Exchange in London, Brent oil for January delivery jumped $1.30, or 2.89%, to trade at $46.12 a barrel during U.S. morning hours.
A day earlier, prices tacked on 17 cents, or 0.38%, after Saudi Arabia said it is prepared to use all measures necessary to ensure a stable oil market.
Turkish fighter jets shot down a Russian warplane near the Syrian border after it violated Turkey's airspace on Tuesday, a Turkish military official said. However, Russia's defense ministry said the downed fighter jet did not violate Turkish airspace.
Russian President Vladimir Putin said the act was "a stab in the back" carried out by the accomplices of terrorists and that the incident would have serious consequences for Moscow's relations with Ankara.
Oil traders are sensitive to risky geopolitical news coming out the Middle East.
There are fears that an escalation of hostilities could set off a conflict across the region and send oil prices skyrocketing. Countries in the Middle East were responsible for nearly 35% of global oil production last year.
Elsewhere, crude oil for delivery in January on the New York Mercantile Exchange rose $1.31, or 3.14%, to trade at $43.06 a barrel. On Monday, Nymex futures dipped 15 cents, or 0.36%.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 1.1 million barrels in the week ended November 20.
U.S. oil supplies in the U.S. rose for the eighth consecutive week last week, remaining near levels not seen for this time of year in at least the last 80 years.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $3.06 a barrel, compared to $3.08 by close of trade on Monday.
The oil market has been on the defensive in recent months amid uncertainty about how quickly the global glut of crude is set to shrink.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
OPEC will meet on December 4 to review their output strategy. Saudi Arabia and other Gulf OPEC members have recently indicated they will continue to stick to their policy of defending market share by keeping production high.