2024-01-17T04:32:28+00:00
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/ Oil prices fell on Wednesday after the US dollar rose and investors’ risk aversion offset concerns about tensions in the Middle East, including ongoing attacks on ships in the Red Sea by Iran-backed Houthi rebels.
Brent crude fell below $78 a barrel by 02:15 GMT, after ending slightly higher on Tuesday, with West Texas Intermediate crude approaching $72.
The US currency posted its biggest one-day jump since March last year yesterday, as traders recalibrated their expectations for when the Federal Reserve will start cutting interest rates, making commodities less attractive to overseas buyers.
Meanwhile, tensions in the Middle East remain front and center. Houthi militants in Yemen continue to threaten shipping in the vital waterway off their coast, despite strikes by the US and UK. There are concerns that the war between Israel and Hamas will spread beyond Gaza, potentially drawing in Iran directly, with Tehran firing missiles this week at what it said was an Israeli spy base in Iraq.
In another sign of the fallout from the standoff, some insurers have begun to avoid covering U.S. and British merchant ships against war risks when they sail through the southern Red Sea. Many oil and gas tankers are now avoiding the waterway entirely, forcing them to take a longer route around southern Africa.
Oil has been rangebound since the start of the year, with the Middle East crisis yet to have a direct impact on physical output. Traders will get a dual view of the outlook later on Wednesday, when the Organization of the Petroleum Exporting Countries releases its monthly market assessment and a U.S. industry group releases estimates of domestic crude inventories.
In the United States, freezing temperatures have limited refining operations at a processing hub in Texas and shut more than half of North Dakota’s oil production. The North Dakota Pipeline Authority said up to 650,000 barrels per day were offline, up from 425,000 barrels on Monday.