Oil prices stabilise despite trade disruptions by Houthis

Oil prices were mixed on Tuesday, with the US benchmark dipping while Brent extended gains from the previous session, as attacks by Yemen’s Iran-aligned Houthi militants on ships in the Red Sea disrupted maritime trade and forced companies to reroute vessels.

Brent crude futures had risen 10c, or 0.13%, to $78.05 a barrel by 3.30am GMT. The front-month US West Texas Intermediate (WTI) crude futures contract, which expires on Tuesday, fell 7c to $72.40 a barrel. The more active second-month contract was down 5c, or 0.07%, to $72.77.

Both benchmarks rose more than 1% on Monday on concerns about shipping companies diverting vessels away from the Red Sea.

“Despite price stabilisation today, the potential risks caused by supply disruptions and the Middle East unrest could bring significant volatility to oil markets,” said Tina Teng, an analyst at CMC Markets in Auckland. “Oil markets may face further upside pressure if geopolitical tensions get escalated.”

Oil major BP temporarily paused all transits through the Red Sea and oil tanker group Frontline said on Monday its vessels would avoid passage through the waterway, signs the crisis is broadening to include energy shipments.

About 15% of the world’s shipping traffic transits via the Suez Canal, which connects the Red Sea to the Mediterranean, offering the shortest shipping route between Europe and Asia.

The shipping attacks have prompted the US and its allies to discuss a task force that would protect Red Sea routes, a move that Iran has warned would be a mistake.

In Iran, oil minister Javad Owji on Monday confirmed that a nationwide disruption to petrol stations was caused by a cyberattack. A hacking group that Iran accuses of having links to Israel claimed it carried out the attack on Monday, Iranian state TV and Israeli local media reported.

Meanwhile, the US will push shippers to disclose more information about their Russian oil dealings in a bid to enforce sanctions, US officials said on Monday, while acknowledging that a big chunk of the trade has already escaped Western oversight after Russia built a parallel fleet.

Reuters