Global Oil Markets Monitor Impact Of Houthi-Linked Attacks On Red Sea Shipping Route
Oil steadied as the investors considered the potential effect on the oil supply from attacks by the Iran-aligned Houthi militants against vessels in the Red Sea that have disrupted maritime trade and compelled firms to reroute the vessels. On Monday, crude prices climbed almost 2% on fears regarding disruptions to trade via the Suez Canal, the shortest shipping channel between Asia and Europe that accounts for nearly 15% of worldwide shipping traffic.
Brent crude had dropped 12 cents to $77.83 a barrel by 0914 GMT. The U.S. West Texas Intermediate crude for January, which expires on Tuesday, was down 62 cents at about $71.85, while the more active February deal had lost just 3 cents.
Though the attacks on shipping have been boosting geopolitical risk premium, the actual impact on oil flows is most likely to remain limited, mentioned John Evans of the oil broker PVM. The attacks haven’t hit anything that would be interfering with the production, he reported.
Goldman Sachs specialists mentioned the disruption is unlikely to have a huge impact on crude and liquefied natural gas (LNG) rates as opportunities to reroute vessels suggest that the production shouldn’t be affected directly.
Oil major BP has temporarily halted the transit through the Red Sea and the oil tanker group Frontline on Monday said that its ships would be avoiding the channel — signs that a crisis was broadening for including energy shipments.
The shipping attacks have prompted the US and its allies to brainstorm a task force which would safeguard Red Sea channels in a move that Israeli and its U.S. arch-foe Iran have reportedly warned would be a big mistake.
Also, in focus in the week will be the most recent snapshot of the U.S. supplies. The U.S. crude inventories are likely to fall by about 2.2 million barrels, a Reuters poll reflected. The first of the week’s two supply reports from the American Petroleum Institute is due at about 2130 GMT.
Reference: Reuters
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