Jan 15, 2024: Oil prices inched higher on Monday as market participants remained vigilant about potential disruptions in the Middle East following airstrikes by U.S. and British forces targeting Houthi militia in Yemen to prevent attacks on ships in the Red Sea.
Brent crude futures increased by 13 cents, or 0.2%, reaching $78.42 a barrel by 0405 GMT, following a 1.1% gain in the previous session. U.S. West Texas Intermediate crude was at $72.73 a barrel, up 5 cents, or 0.1%, after nearly a 1% rise in the preceding session.
Last week, the benchmarks experienced a surge of more than 2%, reaching their highest intraday levels for the year, as U.S. and British forces conducted numerous air strikes against Houthi forces in response to continuous attacks on Red Sea shipping, which the Iran-backed fighters presented as a reaction to the conflict in Gaza.
Warren Patterson, Head of Commodities Research at ING, noted potential supply risks due to the escalation in the Red Sea but emphasized that there hasn’t been any immediate impact on oil supply. He suggested that a substantial escalation would be required to observe such an impact.
On Sunday, the Houthi militia issued a threat of a “strong and effective response” following another U.S. strike overnight, intensifying tensions. The U.S. later reported intercepting a missile fired at one of its ships from Houthi militant areas in Yemen.
President Joe Biden mentioned that the United States had communicated a private message to Iran regarding the Houthi attacks. Several tanker owners avoided the Red Sea, and multiple tankers altered their course on Friday after the airstrikes. However, traders remained attentive to Iran’s potential response and its impact on shipments in the Strait of Hormuz, the world’s most critical oil chokepoint.