Oil ticks up as Middle East crisis escalates, tankers divert

By Arathy Somasekhar

(Reuters) - Oil prices edged slightly higher on Tuesday as the Middle East crisis escalated and ship tracking data showed more tankers altering course away from the Red Sea in response to attacks in the area by Yemen's Houthi movement.

Brent crude futures rose 12 cents, or about 0.2%, to$78.27 a barrel at 0002 GMT. The contract had settled 14 cents lower on Monday.

U.S. West Texas Intermediate crude was down 17 cents, or 0.2%, at $72.52 per barrel after a U.S. public holiday on Monday.

Yemen's Houthi movement will expand its targets in the Red Sea region to include U.S. ships, an official from the Iran-allied group said on Monday, as it vowed to keep up attacks after U.S. and British strikes on its sites in Yemen.

More oil tankers were steering clear of the southern Red Sea on Monday, due to the disruptions, increasing the cost of shipping and the time it takes to move oil from one place to another.

Following the U.S. and British strikes, the U.S.-led Combined Maritime Forces (CMF) based in Bahrain on Friday warned all ships to avoid the Bab al-Mandab Strait at the south end of the Red Sea for several days, tanker body INTERTANKO said.

Regional shipping tensions also spread to the other side of the peninsula last week when Iran seized a tanker south of the Strait of Hormuz, another key shipping corridor.

Oil prices rose 2% last week in response to the rising conflict in the region, but the lack of direct impact on oil production could be limiting gains, according to analysts.

(Reporting by Arathy Somasekhar in Houston; Editing by Jamie Freed)