Prices Ease on Limited Impact to Crude Oil Output

January 16, 2024
brent crude oil

By Adedapo Adesanya

Prices weakened slightly on Monday as the Middle East conflict’s limited impact on crude oil output, with Brent losing 14 cents or 0.2 per cent to sell at $78.15 a barrel.

However, there was no settlement for the US West Texas Intermediate (WTI) crude due to the US Martin Luther King Jr. Day holiday, but its price was down by 18 cents or 0.3 per cent to $72.50 per barrel earlier in the session.

More oil tankers steered clear of the southern Red Sea on Monday, as disruptions increase on the vital route for energy shipping in the wake of US-led strikes against Houthi targets in Yemen.

The Combined Maritime Forces (CMF), a multinational maritime partnership led by the US from Bahrain, warned all ships to avoid the Bab al-Mandab Strait at the south end of the Red Sea for several days.

The Houthis have been targeting commercial vessels since late last year in attacks the groups says aim to support the Palestinians against Israel’s devastating offensive in the Hamas-ruled Gaza Strip.

This has led to diversions that have pushed up the cost and time it take to transport oil, although supplies have not yet been impacted.

The chief negotiator for Yemen’s Houthis on Monday warned that attacks on ships headed toward Israel will continue.

The US military said an anti-ship ballistic missile fired by Houthi militants struck a Marshall Islands-flagged, US-owned and operated container ship on Monday.

Market analysts warned that the shipping disruption may indirectly tightening the market by keeping 35 million barrels at sea owing to longer journeys shippers must take to avoid the Red Sea.

Other disruptions may lend support to oil prices in coming days.

In Libya, people protesting against perceived corruption threatened to shut down two more oil and gas facilities after shutting the 300,000 barrel-per-day Sharara field on January 7.

The Libyan government has called for a “return to reason” and for oil production not to be involved in such problems.

Some analysts believe the protest illustrates the political divisions between the two parallel authorities vying for power in the country.

The US and Canada are dealing with frigid weather that is shutting in some oil production.

The European Central Bank (ECB) warned that it is too early to discuss cutting interest rates, a move that could boost the market.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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