Oil prices steady as geopolitical risks take toll

Beijing — Oil prices were little changed in Asian trading on Wednesday as weak demand and a recovery in supply limited the market’s reaction to mounting geopolitical risk.

The front-month March contract for Brent crude inched up 5c to $79.60 a barrel as at 1.38am GMT. US West Texas Intermediate crude ticked up 7c to $74.44 a barrel.

“Weak demand amid ongoing supply risks kept crude oil hemmed in a tight range,” ANZ analysts said in a client note.

The prompt-month contract for Brent crude was trading at a 42c premium over the following month as geopolitical tension drove demand for nearer-term supply.

A coalition of 24 nations led by the US and UK conducted new strikes against Houthi fighters in Yemen on Tuesday. The strikes were aimed at stopping the Houthis’ attacks on global trade, Britain said in a joint statement.

The US said Iran-backed Houthis have mounted 26 attacks since late November on commercial shipping in the Red Sea, a shipping lane used by about 12% of global oil trade before the attacks.

The US also carried out strikes against Iran-linked militia in Iraq on Tuesday, following an attack on an Iraqi airbase that wounded US forces.

But news that Libya had restarted oil exports and US supply had started to recover from a recent cold snap limited price rises, ANZ analysts said.

Libya’s 300,000 bpd Sharara oilfield restarted on January 21 after a protest-related pause since early January.

In the US, the third-largest oil-producing state of North Dakota brought some oil output back online after weather-related disruption, the state’s pipeline authority said. But output was still down as much as 300,000 barrels per day (bpd). In mid-January, output had weakened by as much as 425,000 bpd on extreme cold.

Reuters