Dec 22, 2023: Oil prices saw a slight uptick on Friday as tensions persisted in the Middle East following attacks on ships in the Red Sea by Houthi rebels. However, Angola’s departure from OPEC raised concerns about the group’s effectiveness in stabilizing prices.
At 1326 GMT, Brent crude futures climbed 40 cents to $79.79 a barrel. The Ice Brent minute marker, despite an earlier London close ahead of the Christmas holiday, stood at $79.74 a barrel, showing an increase from Thursday’s $79.29.
U.S. West Texas Intermediate (WTI) crude futures also rose, gaining 50 cents to hit $74.39 a barrel, peaking $1 higher than the previous day’s close during intra-day trading.
Both Brent and WTI futures were set for over 4% weekly gains, bolstered by growing geopolitical risks due to Red Sea attacks and potential disruptions in shipping operations.
The Houthi attacks prompted more maritime carriers to avoid the Red Sea, impacting the Suez Canal, which handles 12% of global trade. Major shippers like Maersk and CMA CGM announced additional charges due to rerouting ships, indicating the impact on shipping operations.
PVM analyst John Evans highlighted that aside from direct supply disruptions, the Red Sea situation was affecting oil prices due to rising freight rates and increased insurance costs, influenced by the disruptions.
However, oil prices saw declines on Thursday following Angola’s announcement of its departure from OPEC. Producing around 1.1 million barrels per day, Angola expressed dissatisfaction with the organization’s decisions, particularly regarding output quota reductions for 2024.
Evans from PVM noted that while Angola’s exit was expected due to its recent stance at the OPEC meeting, it brings forth concerns about potential divisions that could challenge unity within the organization moving forward.