By Adedapo Adesanya
Oil rose nearly 2 per cent on Monday as investors worried about supply disruptions after the Iran-aligned Yemeni Houthi militant group attacked ships in the Red Sea.
Brent crude futures settled higher by $1.40 or 1.8 per cent to $77.95 a barrel and the US West Texas Intermediate (WTI) crude rose by $1.04 or 1.5 per cent to $72.47 a barrel.
Attacks on commercial vessels near the Yemeni coast in the Red Sea have intensified in recent days and maritime security firms and US officials report daily incidents about attacks by the Iran-aligned Houthi rebels in Yemen who continue to attack commercial vessels near the most important oil trade chokepoints in the Gulf.
The spate of attacks in recent days has prompted many shipping and trading companies to suspend temporarily navigation through the Red Sea.
The latest happened as a Norwegian-owned vessel was attacked in the Red Sea on Monday and oil major BP said it had temporarily paused all transit through the water.
Other shipping firms said over the weekend that they would avoid the route. Maersk Tankers, Moller-Maersk, Hapag-Lloyd, MSC, and French CMA CGM have all said their vessels would be avoiding the Suez Canal until the security situation improves.
On Monday, Evergreen said it would temporarily suspend Israel’s import and export service due to rising risk and safety considerations with immediate effect until further notice. Evergreen has also instructed its container ships to suspend navigation through the Red Sea until further notice.
About 15 per cent of world shipping traffic transits via the Suez Canal, the shortest shipping route between Europe and Asia and this could add to inflation.
London’s marine insurance market widened the area in the Red Sea it deemed high risk on Monday, adding to premiums ships pay.
Meanwhile, the US is building a coalition to address the Houthi threat and said defence ministers from the region and beyond would hold virtual talks on the issue on Tuesday.
Also adding support, Russia said on Sunday it would deepen oil export cuts in December by potentially 50,000 barrels per day or more, earlier than promised, as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) try to support global oil prices.
Russia announced the deeper export cuts after it suspended about two-thirds of loadings of its main export grade Urals crude from ports due to a storm and scheduled maintenance on Friday.
Dipo Olowookere