Oil holds gains as Red Sea attacks cause panic among shippers
New York | Oil traded near its highest close in more than two weeks as more companies steer clear of the Red Sea amid a spike in vessel attacks along the key shipping conduit.
West Texas Intermediate’s more active February contract extended its gains above $US74 a barrel after BP and Equinor said they would pause all shipments through the waterway.
At 1.09pm in New York (5.09am AEDT), Brent was 1.7 per cent higher at $US79.24 a barrel.
The most tangible disruption to energy flows since the Israel-Hamas war led the US to announce a new maritime task force to protect commercial vessels. AP
The recent escalation in attacks by Iranian-backed Houthi rebels in Yemen has bolstered a rebound in oil prices that had slumped to a five-month low last week amid signs of rising production.
Despite the current rally, some traders don’t anticipate long-term price impacts for crude, and timespreads – a critical barometer for supply and demand – continue to indicate weakness. WTI’s prompt spread, the difference between its January and February contracts, is trading at US34¢ in contango. That discount for near-term barrels compared to barrels to be delivered later is the widest since February.
The most tangible disruption to energy flows since the Israel-Hamas war led the US to announce a new maritime task force to protect commercial vessels. About 8 per cent of the world’s crude transits through the Suez Canal, putting pressure on tanker utilisation if ships are forced to take the longer route around South Africa, Jefferies analysts said in a note.
Disruption to major trading conduits tend to be short term, and it’s likely the US will take firmer military actions to counter these tensions, said John Driscoll, director and founder of Singapore-based consultant JTD Energy Services.
Bloomberg
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