Oil prices slide as Red Sea transport disruptions ease

London — Oil prices fell roughly 1% on Thursday, as concerns eased about shipping disruptions along the Red Sea route, even as tensions in the Middle East continue to fester.

Brent crude futures were down $0,97, about 1.2%, at $78.68 a barrel by 1026 GMT on subdued trade ahead of their imminent expiry, while the more active March contract was down $0,91, about 1.1%, at $78.63 a barrel.

US WTI crude futures were trading $1.03, or about 1.4%, lower at $73.08 a barrel. Oil prices dropped nearly 2% on Wednesday as major shipping firms began returning to the Red Sea.

Danish shipping company Maersk said it has scheduled several dozen container vessels to travel via the Suez Canal and Red Sea in the coming weeks after calling a temporary halt to those routes this month after attacks by Yemen’s Iran-backed Houthi militia.

However, a US-led coalition to quell tensions in the Red Sea has not so far yielded co-ordinated action as hoped.

A week after the launch of the US-led maritime force, many allies do not want to be associated with it, partly reflecting the fissures created by the conflict in Gaza, which has seen the US maintain firm support for Israel even as international criticism rises over its offensive.

The prospect of a prolonged Israeli military campaign in Gaza and the spillover of the conflict to attacks on ships in the Red Sea remain major drivers of market sentiment.

Israeli forces pummelled central Gaza by land, sea and air on Wednesday, a day after Israel’s chief of staff, Herzi Halevi, told reporters the war would go on “for many months”.

US government data on fuel stockpiles is due on Thursday, delayed by a day due to the Christmas holiday on Monday.

Data from the American Petroleum Institute industry group on Wednesday showed crude stocks rose 1.84-million barrels in the week ended December 22, against estimates from seven analysts polled by Reuters for a drop of 2.7- million barrels.

Meanwhile, the growing prospect of interest rate cuts in Europe and the US in 2024 are positive from an oil demand perspective.

“The market is likely to try the upside again … maybe in the early new year, also on expectations of a recovery in fuel demand thanks to monetary easing in the US and higher kerosene demand during the winter in the northern hemisphere,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

Reuters