On Wednesday, oil prices retreated after shipping companies announced they might return to traversing the Red Sea thanks to the US-led task force.
The US West Texas Intermediate (WTI) crude oil February futures plunged -2.02% to $74.04 per barrel on December 27. However, analysts see the energy commodity recovering by 0.49% to $74.40 in the coming session.
Similarly, Brent oil futures for March delivery shed -1.89% to $79.54 a barrel after a hefty 2.53% gain on Tuesday. Industry experts predict the global benchmark bouncing back by up to 0.41% to $79.87 on Thursday.
WTI’s steep drop nearly wiped out last week’s gains as fears of supply chain disruption in the Red Sea mounted. Most commodity futures were boosted after the top shippers rerouted their vessels through the longer South African route.
Tension in the Middle East intensified after Israel’s Chief of Staff Herzi Halevi said on Tuesday that the war would last for many months. A day later, the Israel Defense Forces (IDF) hit Central Gaza with bombardments by land, sea, and air.
Elsewhere, the US continued its momentum as the new global swing producer of crude oil with record-high outputs this month. The American Petroleum Institute (API) reported an increase in petroleum inventories of 1.84 million barrels in the week ending December 22.
In contrast, the Energy Information Administration (EIA) expects a draw of -2.60 million barrels for the same period.
Red Sea Trade to Resume as Oil Shippers Pivot
Maersk, CMA CGM, and other shipping companies said they will consider passing through the Suez Canal again in the coming weeks.
The statements came in response to establishing a US-led multinational coalition to patrol the Red Sea trade route.
America initiated the task force to protect maritime trade in the region from attacks by the Yemeni militant group Houthi. The Iranian-backed militia ramped up its assaults on commercial vessels this month in retaliation for Israel’s bombing and ground operations in Gaza.
Approximately 12.00% of global shipping traffic, including 8.00% of crude oil cargoes, passed through the Red Sea in 2023.
In the first 11 months of the year, an average of 8.20 million barrels per day (bpd) of crude oil traversed the well-known sea route.
