Red Sea tensions and a decline in Russian exports cause oil to rise by almost 1%

18 Dec 2023 , 10:19 AM

Due to decreased Russian shipments and worries about an interruption in the oil supply caused by Houthi attacks on ships in the Red Sea, oil prices increased by about 1% in early Asian trading on Monday.

Brent crude futures had increased by 69 cents, or 0.9%, to $77.24 per barrel, while U.S. West Texas Intermediate crude had increased by 65 cents, or 0.9%, to $72.08 per barrel.

As the world’s largest exporters attempt to boost global oil prices, Russia announced on Sunday that it would deepen oil export limits in December by possibly 50,000 barrels per day or more, earlier than promised.

This comes after a storm and planned maintenance on Friday caused Moscow to halt around two-thirds of the loading of its primary export grade Urals oil from ports.

Shipping companies announced over the weekend that they will steer clear of the Suez Canal due to the Houthi terrorists in Yemen intensifying their attacks on commercial vessels in the Red Sea. These companies include the largest container shipping lines in the world, MSC and A.P. Moller-Maersk.

One of the most significant shipping routes in the world for commodities by sea is Bab al-Mandab. These shipments primarily consist of fuel and crude oil from the Gulf that are travelling westward to the Mediterranean through the Suez Canal or the adjacent SUMED pipeline, as well as commodities that are travelling eastward to Asia, including Russian oil.

After a U.S. Federal Reserve meeting last week raised hopes that interest rate hikes are over and cutbacks are on the horizon, both Brent and WTI halted their longest stretch of weekly drops in half a decade with a slight gain.

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