Oil prices experienced a modest rebound on Thursday following a sharp decline in the previous session, with concerns over shipping disruptions in the Red Sea subsiding even as tensions in the Middle East continued to escalate.

As of 0424 GMT, Brent crude futures inched up by $0.10, or 0.1%, reaching $79.75 a barrel. Meanwhile, US WTI crude futures were trading slightly lower at $74.06 a barrel, down by $0.05. The dip in prices on Wednesday, nearly 2%, occurred as major shipping companies resumed operations in the Red Sea.

Hiroyuki Kikukawa, President of NS Trading, a unit of Nissan Securities, commented on the situation, stating, “Concerns about shipping in the Red Sea have eased, but continued worries about tensions in the Middle East, especially on Iran’s involvement in the region, make it difficult to sell further.”

He added, “The market is likely to try the upside again, maybe in the early new year, also on expectations of a recovery in fuel demand thanks to monetary easing in the US and higher kerosene demand during the winter in the northern hemisphere.”

Danish shipping company Maersk announced that it has scheduled several dozen container vessels to travel via the Suez Canal and Red Sea in the coming weeks. This decision comes after the company temporarily halted these routes in December due to attacks by Yemen’s Iran-backed Houthi militia.

Despite the easing concerns over shipping, the potential for a prolonged Israeli military campaign in Gaza and the spillover of the conflict to attacks on ships in the Red Sea remain significant factors influencing market sentiment.

On Wednesday, Israeli forces conducted extensive operations in central Gaza, utilizing land, sea, and air capabilities. Israel’s Chief of Staff, Herzi Halevi, emphasized that the war would continue “for many months.”

Market participants are also awaiting the release of US government data on fuel stockpiles, which is due on Thursday, delayed by a day due to the Christmas holiday on Monday. Data from the American Petroleum Institute industry group on Wednesday indicated a surprising increase in crude stocks by 1.84 million barrels in the week ending December 22. This contradicted estimates from seven analysts polled by Reuters, who expected a drop of 2.7 million barrels.