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Oil prices score weekly gain as worries rise over Red Sea

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Oil futures ended slightly lower Friday but booked weekly gains as worries remained over disruptions to shipments in the Red Sea.

But upside may have been limited by worries around the supply outlook, possibly amplified by Angola’s Thursday exit from the Organization of the Petroleum Exporting Countries, or OPEC, which raised questions about the cartel’s unity, analysts said.

Price action

West Texas Intermediate crude for February delivery
CL00,
-0.54%

CL.1,
-0.54%

CLG24,
-0.54%

lost 33 cents, or 0.5%, to close at $73.56 a barrel on the New York Mercantile Exchange. For the week, WTI rose 2.5%.

February Brent crude
BRN00,
+0.11%

BRNG24,
+0.15%
,
the global benchmark, fell 32 cents, or 0.4%, to settle at $79.07 a barrel on ICE Futures Europe, leaving it with a 3.3% weekly rise.

January gasoline
RBF24,
-1.72%

fell 1.3% to $2.13 a gallon, while January heating oil
HOF24,
-1.61%

dropped 1.3% to $2.661 a gallon.

January natural gas
NGF24,
+1.32%

gained 1.5% to end at $2.61 per million British thermal units.

Market drivers

Several shipping companies have suspended shipments through the Red Sea after a series of drone and missile attacks by Iran-backed Houthi rebels since the start of the Israel-Hamas war. The U.S. earlier this week announced a naval coalition would move to halt the attacks.

“A perfect storm has erupted, as low water levels in the Panama Canal have coincided with shipping companies avoiding the Suez Canal following attacks by Houthi rebels in the Red Sea,” Kieran Tompkins, commodities economist at Capital Economics, said in a note.

Read: Attacks in the Red Sea add to global shipping woes

Oil futures fell Thursday after Angola announced its departure from OPEC.

That move by itself is unlikely to have any impact on prices, analysts said. Underinvestment has left the country struggling to increase output, leaving it unlikely to produce much beyond its previous OPEC quota, Tompkins said.

Read: Angola leaves OPEC, raising questions about ‘unity and harmony’ within oil cartel

“It does, however, suggest that cracks may be forming in OPEC. If larger producers with available spare capacity — some such as the U.A.E. (United Arab Emirates) have publicly expressed dissatisfaction with the group’s decisions recently — were to follow Angola out the door, prices would come under downward pressure,” he wrote.

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