By Adedapo Adesanya
Oil prices dropped nearly 2 per cent on Wednesday as the market resumed fully with investors monitoring developments in the Red Sea, where shippers are returning despite further attacks on Tuesday.
Brent crude futures lost $1.42 or 1.8 per cent to trade at $79.65 a barrel and the US West Texas Intermediate (WTI) crude fell by $1.46 or 1.9 per cent to quote at $74.11 per barrel.
Danish shipping company, Maersk, said it has scheduled several dozen container vessels to travel via the Suez Canal and the Red Sea in the coming weeks after calling a temporary halt to those routes this month due to attacks by Yemen’s Iran-backed Houthi militia.
This move eases worries about a supply disruption that started last month when Houthi rebels in Yemen launched attacks on commercial shipping vessels in transit via the lower Red Sea after Israel began its war on Hamas in the Gaza Strip.
Ships traveling through the Red Sea and the Bab al-Mandab Strait have faced persistent attacks by the militants, greatly increasing the risk for ships passing through the Suez Canal.
The Red Sea is the most significant waterway connecting Europe to Asia and East Africa and also one of the world’s most densely packed shipping channels where about 12 per cent of global trade, including 30 per cent of global container traffic, passes through.
As a result, dozens of companies have stopped shipping in the Red Sea and at the Suez Canal. Some of the largest container-shipping companies, including Maersk, Hapag-Lloyd, CMA, CGM, and MSC, have paused or suspended their services in the Red Sea.
So far, the shipping disruptions have not significantly affected oil and gas prices.
Israeli forces pummelled central Gaza by land, sea, and air on Wednesday, a day after Israel’s Chief of Staff, Mr Herzi Halevi, told reporters that the war would go on “for many months,” according to Reuters.
Meanwhile, oil loadings at the Russian Black Sea port of Novorossiisk were suspended because of a storm. However, Kazakhstan’s energy ministry said the Caspian Pipeline Consortium (CPC) terminal near the port was open.
On the supply front, analysts warned that oil output in Russia, the third largest producer in the world after the US and Saudi Arabia, is expected to be steady or even to increase next year as the country has largely overcome Western sanctions following its war on Ukraine in 2022.
Inventory reports from the American Petroleum Institute (API) and the US Energy Information Administration (EIA) are expected on Wednesday and Thursday respectively, a day later than normal because of the Christmas holiday.
Modupe Gbadeyanka