Oil Prices Rebound in Asian Markets Amid Red Sea Shipping Concerns

Amid escalating attacks on shipping in the Red Sea and growing uncertainty regarding U.S. interest rate cuts, oil prices rebounded in Asian markets today.

Brent crude oil, against which Nigerian oil is priced, climbed by 24 cents to $82.58 a barrel while the U.S. West Texas Intermediate crude oil (WTI) rose by 21 cents to $77.25.

The rebound comes after both Brent and WTI contracts experienced a 1.5% and 1.4% decline, respectively, from their near three-week highs on Tuesday.

This decline occurred as the premium for prompt U.S. crude futures to the second-month contract widened to $1.71 a barrel, its widest level in approximately four months.

However, on Wednesday, the premiums slid to 4 cents a barrel.

Analysts suggest that oil futures have entered a relatively range-bound phase, with current prices reflecting a risk premium of $6-7 per barrel.

The situation could persist until the next significant development in the Gaza crisis, whether it involves a de-escalation through a ceasefire or a further intensification of the conflict.

Recent attacks on vessels in the Red Sea and Bab al-Mandab strait by Yemen’s Iran-aligned Houthis have heightened concerns over freight flows through these critical waterways.

Moreover, Washington’s veto of a draft UN Security Council resolution on the Israel-Hamas war has added to geopolitical tensions impacting oil markets.