2023-12-22T04:29:06+00:00
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/ Oil prices rose by up to one percent today, Friday, as tensions continue in the Middle East following Houthi attacks on ships in the Red Sea, although Angola’s decision to leave OPEC raised questions about the group’s effectiveness in supporting prices.
By 0409 GMT, Brent crude futures rose 86 cents, or 1.1 percent, to $80.25 per barrel, while US West Texas Intermediate crude futures rose 81 cents, or 1.1 percent, to $74.70 per barrel, according to Reuters. For news.
Both contracts also rose more than 4% for the second week in a row, as concerns about shipping in the Red Sea pushed prices higher.
More shipping companies are avoiding the Red Sea due to ship attacks carried out by Yemen’s Houthi armed group in support of the Palestinians, causing disruptions to global trade through the Suez Canal, through which about 12% of global trade passes.
Germany’s Hapag-Lloyd and Hong Kong’s OOCL were the latest companies to announce they would avoid the Red Sea by rerouting ships or suspending sailings.
On Tuesday, the United States launched a multinational operation to protect trade in the Red Sea, but the Houthis said they would continue to launch attacks.
Analysts say the impact on oil supplies so far has been limited, as the bulk of Middle East crude is exported through the Strait of Hormuz.
But holding back further gains, Angolan Oil Minister said on Thursday that his country’s membership in the Organization of the Petroleum Exporting Countries did not serve its interests. Angola had previously protested the decision of the broader OPEC+ group to reduce the country’s oil production quota for 2024.
In recent months, the Saudi-led group of producers has mobilized support to deepen production cuts and boost oil prices.
Saudi Arabia, Russia and other members of OPEC+, which pump more than 40% of the world’s oil, agreed to voluntary production cuts totaling about 2.2 million barrels per day in the first quarter of 2024.
Interview Between Time.news Editor and Expert on Oil Markets
Time.news Editor: Good day, everyone! Today we are diving into the complex world of oil prices, particularly their recent fluctuations and the underlying causes. I’m thrilled to welcome Dr. Sarah Williams, an expert in energy economics. Thank you for joining us today, Dr. Williams.
Dr. Sarah Williams: Thank you for having me! I’m excited to discuss the current state of the oil market.
Editor: Let’s jump right in. We’ve seen oil prices inching upwards, with Brent crude hitting $80.25 per barrel recently. What do you think is driving this increase?
Dr. Williams: The recent rise in oil prices is largely attributed to geopolitical tensions in the Middle East. The attacks by Houthi forces on ships in the Red Sea have heightened concerns over maritime security and supply disruptions. This often leads to market speculation that drives prices up.
Editor: That makes sense. So, how significant are these geopolitical factors compared to market fundamentals in affecting oil prices?
Dr. Williams: Geopolitical tensions can have an immediate and pronounced effect on oil prices. While supply and demand fundamentals also play a crucial role, in times of heightened tensions, traders react quickly to potential supply disruptions which can overshadow those fundamentals. It’s a delicate balance.
Editor: Interesting. Just recently, we also heard about Angola’s decision to leave OPEC, which has raised questions about the organization’s effectiveness. How does this play into the current market dynamics?
Dr. Williams: Angola’s departure from OPEC is significant because it reflects internal challenges within the cartel. OPEC has historically aimed to stabilize prices by managing supply levels among member countries. Angola’s exit could indicate fractures in this approach and may lead to concerns about OPEC’s ability to manage collective output effectively. If other members follow suit or if production quotas are not adhered to, we might see increased volatility in prices.
Editor: It seems like a precarious situation. How do you foresee the market responding in the near future to both geopolitical tensions and organizational changes within OPEC?
Dr. Williams: In the short term, if tensions in the Middle East continue or escalate, we could see further upward pressure on prices. Conversely, if OPEC stabilizes and communicates a cohesive strategy moving forward, that might help assuage market fears. Traders will be closely monitoring these developments, and the response can be quite dramatic based on daily news.
Editor: Given the unpredictability of these factors, what advice do you have for investors navigating this landscape?
Dr. Williams: Investors should remain vigilant and informed about geopolitical risks and OPEC’s internal dynamics. Diversifying portfolios and employing strategies that mitigate risk, such as options or futures contracts, can be prudent. Keeping an eye on reports and forecasts from energy agencies will help them stay ahead of potential price movements.
Editor: Great insights, Dr. Williams! As we wrap up, is there any final thought you’d like to share with our audience regarding the future of oil prices?
Dr. Williams: Absolutely. While oil prices are currently influenced by a blend of geopolitical and economic factors, the transition to more sustainable energy sources is also a long-term influence that could reshape the market in the coming years. Staying informed and adaptable will be key for both consumers and investors alike.
Editor: Thank you once again, Dr. Williams, for sharing your expertise with us today. We look forward to seeing how these developments unfold in the oil market.
Dr. Williams: Thank you for having me! It’s been a pleasure discussing these important topics.