Oil futures were relatively unchanged in early trading on Tuesday, as prices stabilized after reaching two-week highs due to recent attacks on ships in the Red Sea. These incidents have led to concerns about potential disruptions in oil supply.
Price Action
- The West Texas Intermediate crude for January delivery, CL.1 (+0.08%), CLF24 (+0.08%), saw a marginal increase of 1 cent, reaching $72.48 per barrel on the New York Mercantile Exchange.
- Meanwhile, the global benchmark, February Brent crude, BRN00 (-0.04%), BRNG24 (-0.04%), rose by 8 cents, or 0.1%, to reach $78.03 per barrel on ICE Futures Europe.
Market Drivers
Both Brent and WTI closed at their highest levels since December 4th as a result of support from oil major BP PLC’s announcement regarding the temporary suspension of shipments through the Red Sea. This decision was made in response to a series of drone and missile attacks by Houthi rebels, who control Yemen, since the onset of the Israel-Hamas war.
Crude prices experienced a modest increase after the attack on southern Israel by Hamas on October 7th due to fears of a wider conflict. However, these gains were short-lived, and prices soon traded at six-month lows during the beginning of last week before seeing a slight rebound.
In response to BP’s announcement, lead investment analyst Raffi Boyadjian from XM noted that the market briefly panicked about a significant disruption to global supply but has since eased due to the presence of U.S. warships in the region and the belief that further escalation is unlikely. As a result, oil prices have steadied today, retracting from the two-week highs reached yesterday.