Oil Prices Inch Upward on Red Sea Ship Attacks and Russia’s Export Cut Plans

Global oil prices experienced an upward trend fueled by a combination of heightened geopolitical tensions and strategic decisions by major players.

The recent attacks on commercial vessels in the Red Sea by Iran-backed Houthi rebels have raised concerns over potential disruptions to oil supply routes.

Shipping giants, including MSC and A.P. Moller-Maersk, have already announced their intention to steer clear of the Suez Canal in response to the escalating assaults.

Brent crude oil, the international benchmark for Nigerian oil, rose by 0.2% to $76.72 a barrel while the U.S. West Texas Intermediate crude oil saw a 0.7% increase to settle at $71.91.

These modest gains mark a shift from the seven consecutive weeks of decline that the oil market experienced.

Analysts point to the rising geopolitical risk premium as a significant factor in the resurgence of oil prices.

The recurrent hostilities towards commercial vessels in the Red Sea have amplified concerns, contributing to a renewed focus on the oil market.

Tamas Varga of oil broker PVM highlighted the indisputable role of geopolitical tensions in influencing oil prices.

Adding to the complex landscape, Russia declared its intention to deepen oil export cuts in December, potentially reducing exports by 50,000 barrels per day or more.

This move comes earlier than initially promised, as Moscow grapples with storm-related disruptions and scheduled maintenance that led to a suspension of about two-thirds of loadings of its main export grade Urals crude from ports.

The weakened dollar further supported oil prices, creating a scenario where dollar-denominated oil becomes more affordable for foreign buyers.

Analysts suggest that this trend reflects a greater risk appetite among investors. As global uncertainties persist, the oil market remains dynamic, responding to a complex interplay of geopolitical events and strategic decisions by key players.