Dec 19, 2023: On Tuesday, oil prices saw a divide as the U.S. benchmark dipped while Brent expanded gains, following attacks by Yemen’s Iran-aligned Houthi militants on ships in the Red Sea. These disruptions led companies to reroute vessels, impacting maritime trade.
Brent crude futures edged up 10 cents to reach $78.05 a barrel at 0330 GMT. However, the front-month U.S. West Texas Intermediate crude futures contract, expiring on Tuesday, experienced a dip of 7 cents, settling at $72.40 a barrel. The more active second-month contract also slipped 5 cents to $72.77, a decrease of 0.07%.
Monday saw both benchmarks rise by over 1%, driven by concerns regarding ships avoiding the Red Sea.
Analyst Tina Teng from CMC Markets in Auckland highlighted the potential for volatility in oil markets due to supply disruptions and unrest in the Middle East. She noted that further escalation in geopolitical tensions might add upward pressure on oil prices.
Oil giants like BP and the oil tanker group Frontline have temporarily halted or redirected vessel transits through the Red Sea, signaling a broader impact on energy shipments. The Suez Canal, through which about 15% of global shipping traffic passes, is a crucial link between Europe and Asia.
The situation prompted discussions among U.S. allies about establishing a task force to safeguard Red Sea routes, a move cautioned against by Iran, a key adversary to the U.S. and Israel.
In Iran, a cyberattack was confirmed to have caused a nationwide disruption in petrol stations, an event attributed to a hacking group allegedly linked to Israel.
Simultaneously, U.S. officials announced intentions to press shippers for increased disclosure about their dealings with Russian oil to enforce sanctions. However, a significant portion of this trade has evaded Western oversight due to Russia establishing an alternative fleet.