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Oil soared on Friday amid heightened tensions in the Red Sea following attacks by the United States and its allies on Yemeni strongholds controlled by the Iranian-backed Houthi rebels.
West Texas Intermediate (CL=F) crude oil prices rose as much as 3% to over $75 a barrel at the session high. Brent crude oil (BZ=F), the international benchmark, rose as much as 3%, hitting a trading high of over $80.70 per barrel. WTI and Brent pared some gains in mid-morning trading.
WTI and Brent prices both rose more than 6% last month.
“This attack is a direct response to the unprecedented Houthi attack on international shipping in the Red Sea,” President Biden said in a statement Thursday.
Oil prices have waxed and waned as traders weigh rising supplies from the U.S. and other countries against geopolitical risks.
Peter McNally, Global Sector Leader, said: “Rising global oil inventories are providing a buffer against minor disruptions, but the escalation of conflict on the Arabian Peninsula itself due to US-led military attacks on the Houthi rebels is likely to “This is shaking the oil market from its status quo.” Third Bridge Industries, Materials and Energy spoke to Yahoo Finance on Friday.
Further escalation in tensions in the region could fuel fears of a wider war with Iran, which produces nearly 3 million barrels a day.
Jay Hatfield, CEO of Infrastructure Capital Advisors, told Yahoo Finance: “If Iranian production is disrupted, global prices could rise by up to $30 per barrel. There is,” he said.
Ships have been advised by the global shipping industry to avoid the Red Sea region, which connects to the Suez Canal, a key route between Asia and Europe.
On Friday, Danish oil tanker TORM (TRMD) announced it would suspend all shipments through the southern Red Sea, Bloomberg reported. The company owns more than 80 vessels that transport refined energy products and chemicals.
The Houthis have been targeting ships for the last month as a sign of support for the Palestinians in the Israel-Hamas war. According to shipping data platform Freitos Terminal, “at least 23 commercial ships have been targeted” since mid-November.
In response, shipping costs have soared, Bank of America data shows.
Last week, cargo giants Maersk (MAERSK-A.CO, MAERSK-B.CO) and German shipping company Hapag-Lloyd (HLAG.DE) announced they would suspend sailings in the region until further notice.
Analysts at Goldman Sachs estimate that as of last month, at least 70% to 80% of ships had changed routes, making journeys 30% longer and more expensive.
“In response to recent attacks on commercial ships in the Red Sea, the rerouting of ships from Suez through the Cape has reduced available space on container ships,” Goldman analyst Patrick Kruse said in a note to investors. has decreased significantly.” “Depending on how long the disruption lasts, it could lead to supply chain disruptions and significantly higher transportation costs, particularly for trade between Asia and Europe.”
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X @ines_ferre.
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