On early Monday, oil prices bounced back as Houthis maritime attacks on vessels raised concerns of disruption on the Red Sea supply route.
The US West Texas Intermediate (WTI) crude oil futures for February delivery increased 0.90% to $72.08 per barrel on December 18. However, analysts anticipate a -0.18% slide to $71.95 a barrel by the end of the session, above Friday’s $71.43 close.
Houthi militants in Yemen ramped up their assaults on commercial ships in and around Bab al-Mandab. Bab al-Mandab is one of the world’s most critical routes for seaborne commodities headed westward via the Suez Canal.
Additionally, harsh Russian weather forced Moscow to stop approximately two-thirds of its Urals petroleum from leaving ports. The decision followed a Sunday announcement that Russia will reduce its oil output by 50,000 barrels per day (bpd) in December.
Furthermore, record oil production in the US continued to pressure the price of the energy commodity. Analysts claimed that the country has emerged as the new global swing producer of black gold, replacing Saudi Arabia.
According to the International Energy Agency (EIA), the 2023 US oil supply is predicted to lift by 1.40 million bpd. The figure will account for 62.50% of the 2.24 million yield growth from non-members of the Organization of the Petroleum Exporting Countries (OPEC) and allies this year.
The US has become the biggest beneficiary of the shrinking market share of OPEC+ members due to their production cuts.
Red Sea Disruption Threatens Oil Supply to Asia
Shipping firms, including global juggernauts MSC and AP Moller-Maersk, said they would avoid going through the Suez Canal. As a result, industry watchers cautioned that Asia-bound crude oil and fuel shipments may have difficulties reaching their destinations.
In addition, some shipping lines have ordered their vessels to pause their journey instead of bearing the additional rerouting costs. Such a move may lead crude oil exports to the Mediterranean and near the SUMED pipeline to encounter significant delays.
Iranian-backed Houthis rebels declared their intention to continue the attacks as long as the Israel-Hamas war continues. They initially limited their assault to vessels coming from and heading to Israel but have escalated to hitting any commercial ship.
