Oil Prices Rise on Concerns of Supply Disruptions and Russia’s Export Cuts
LONDON—Oil prices climbed on Monday as attacks on ships in the Red Sea by Houthi rebels raised concerns about potential disruptions in oil supply. Additionally, Russia’s announcement to deepen oil export cuts in December provided further support to the market.
Shipping Firms Avoid Suez Canal Amidst Houthi Attacks
Major shipping firms, including MSC and A.P. Moller-Maersk, announced over the weekend that they would avoid the Suez Canal due to increased attacks by Houthi gunmen in Yemen. These assaults on commercial vessels in the Red Sea have heightened worries about the safety of oil shipments.
Brent Crude and West Texas Intermediate See Gains
Brent crude futures rose by 0.2 percent to $76.72 a barrel, while U.S. West Texas Intermediate crude increased by 0.7 percent to $71.91. Both crude benchmarks experienced small gains last week after the U.S. Federal Reserve meeting raised hopes of interest rate cuts.
Geopolitical Risks and Russia’s Export Cuts Support Oil Prices
Tamas Varga, an oil broker at PVM, stated that the rise in geopolitical risk premium, particularly due to Houthi attacks in the Red Sea, has played a significant role in oil’s recent price increase. Furthermore, Russia’s decision to deepen oil export cuts in December by potentially 50,000 barrels per day or more has added support to global oil prices.
Weakened Dollar Contributes to Oil Price Rise
Analyst Tina Teng from CMC Markets noted that a weakened dollar has also contributed to the rise in oil prices. A weaker dollar makes dollar-denominated oil cheaper for foreign buyers and reflects a greater investor risk appetite.
Conclusion
The recent attacks on ships in the Red Sea by Houthi rebels have raised concerns about potential disruptions in oil supply, leading to an increase in oil prices. Additionally, Russia’s decision to deepen oil export cuts in December has provided further support to global oil prices. The weakened dollar has also contributed to the rise in oil prices. As geopolitical risks persist and market dynamics continue to evolve, the future of oil prices remains uncertain.
By Alex Lawler
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