Latest News

Oil gains nearly 2% as tankers reroute after Red Sea attacks


Oil gains nearly 2% as tankers reroute after Red Sea attacks By Reuters

Breaking News



Published Dec 18, 2023 01:30
Updated Dec 18, 2023 21:50

© Reuters. FILE PHOTO: Oil pumps are seen, as oil and gas activity dips in the Eagle Ford Shale oil field due to the coronavirus disease (COVID-19) pandemic and the drop in demand for oil globally, in Karnes County, Texas, U.S., May 18, 2020. Picture taken May 18, 2

By Arathy Somasekhar

HOUSTON (Reuters) -Oil rose nearly 2% on Monday as investors worried about disruptions to maritime trade and supply costs after the Iran-aligned Yemeni Houthi militant group attacked ships in the Red Sea.

A Norwegian-owned vessel was attacked in the Red Sea on Monday and oil major BP (LON:BP) said it had temporarily paused all transit through the water. Other shipping firms said over the weekend that they would avoid the route.

Brent crude futures settled higher $1.40, or 1.8%, to $77.95 a barrel, while U.S. West Texas Intermediate crude rose $1.04, or 1.5%, to $72.47. Both benchmarks had risen nearly $3 earlier in the session.

“There are now the increased supply costs to consider as a growing number of oil tankers are halting all sails through the Red Sea strait,” said Fawad Razaqzada, market analyst at StoneX.

About 15% of world shipping traffic transits via the Suez Canal, the shortest shipping route between Europe and Asia. London’s marine insurance market widened the area in the Red Sea it deemed high risk on Monday, adding to premiums ships pay.

U.S. Defense Secretary Lloyd Austin said Washington was building a coalition to address the Houthi threat and said defence ministers from the region and beyond would hold virtual talks on the issue on Tuesday.

The contracts last week posted a small gain, following seven weeks of decline, after a U.S. Federal Reserve meeting raised hopes that the U.S. central bank’s interest rate hikes are over and cuts are on the way.

However, ample oil supply limited price gains on Monday. Brent and U.S. crude for prompt delivery traded at a discount to future deliveries, signalling a well-supplied physical market.

Prices for U.S. crude to be delivered in January traded as much as 40 cents lower than those for delivery in February, their widest spread since November 2020.

Also adding support, Russia said on Sunday it would deepen oil export cuts in December by potentially 50,000 barrels per day or more, earlier than promised, as the world’s biggest exporters try to support global oil prices.

Russia announced the deeper export cuts after it suspended about two-thirds of loadings of its main export grade Urals crude from ports due to a storm and scheduled maintenance on Friday.

Meanwhile, Saudi Arabia’s crude oil exports in October hit their highest level in four months, data from the Joint Organizations Data Initiative showed.

Markets may also be seeing some short covering, analysts said. Money managers cut their net long U.S. crude futures and options positions in the week to Dec. 12, the 11th straight week of cuts, the U.S. Commodity Futures Trading Commission said on Friday.

U.S. oil output from top shale-producing regions is set to decline in January for the third consecutive month, the U.S. Energy Information Administration (EIA) said, while production from the top Permian basin is set to rise to a record for an eighth straight month.

“Considering today’s rally and the positive action from last week, there’s a chance that oil might have hit rock bottom,” StoneX’s Razaqzada said.

Oil gains nearly 2% as tankers reroute after Red Sea attacks

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2023 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Some Apple Watch sales will be halted starting Thursday; Apple stock falls

Previous article

‘Magnificent Seven’ up for another bull run? What to expect from technology stocks in 2024.

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News