The oil market remains unstable, while shipping risks in the Red Sea increase. This morning, Brent crude oil opened higher, reaching over 77 dollars per barrel, before falling below 76 dollars per barrel due to the opposing effects of the Red Sea crisis and the increase in production in the United States.
Egypt’s Suez Canal Authority is closely monitoring tensions in the region after the United States said it shot down 14 drones launched from Houthi-controlled areas in Yemen. Major shipping companies have diverted ships away from the area, while some oil companies insist that their ships be allowed to avoid the Red Sea.
Some analysts continue to see supply as the main focus of the market, with US oil production reaching new records at the end of the year.
Read more: INCREASED OIL PRODUCTION IN THE UNITED STATES PLACES OPEC+ PRICE STRATEGY AT RISK
US efforts to combat Yemen’s Houthi rebels as they attack ships in one of the world’s most important waterways are hitting a major roadblock due to disagreements among Washington’s Arab allies.
Two of the most important actors involved in Yemen’s long civil war, Saudi Arabia and the United Arab Emirates, support different groups against the Houthis, who in turn are supported by Iran.
Houthi militias have targeted several fuel tanks and cargo ships in support of Hamas in its war against Israel. They stepped up attacks last week, roiling shipping markets. Over the weekend, the US and UK navies shot down 15 drones launched from Houthi-controlled areas of Yemen.
According to multiple sources, Washington has been communicating with the Houthis through Oman and some other intermediaries, urging them to stop the attacks. A spokesman for the Houthis confirmed the contacts but said the group would continue until Israel stops fighting in Gaza.
The Houthis have repeatedly proven their ability to disrupt or damage crucial infrastructure in Saudi Arabia and the United Arab Emirates. The most devastating attack they claimed occurred in 2019, when they briefly destroyed half of Saudi Arabia’s oil production with a drone attack on an oil processing plant.
If this happens again, oil prices could soar and the conflict between Israel and Hamas could spread across the region.
By Economic Editor
Angola Portal