Oil doesn’t seem able to catch a sustained bid as prices dipped on Monday despite concerns about the Middle East conflict disrupting crude supply.
Following a 2% gain in oil benchmarks last week, Brent Crude was down by 1.21%, while WTI Crude was down by 1.35% at the time of writing on Monday.
“Crude oil is lower this morning, giving back some of the gains made in the latter part of last week. We saw a sharp rally in crude prices on Thursday as investors responded to news of the missiles launched from US and UK warships in the Red Sea,” said David Morrison, senior market analyst at Trade Nation.
On Friday last week, the market observed with caution as some tankers avoided the Red Sea, and several tankers altered their routes. This response came after the U.S. and Britain conducted strikes against Houthi targets in Yemen. The strikes were in retaliation for the Iran-backed group’s attacks on ships, prompted by Israel’s conflict with Hamas in Gaza.
“These were aimed at targets in Yemen and came in response to attacks from Iranian-backed Houthi forces on commercial shipping in that area. Last night it was reported that the US launched another attack and also shot down a cruise missile fired from Yemen,” Morrison added.
“The Houthi attacks have already led to sharp increases in shipping costs, either through rises in insurance premia for ships and cargoes or by ship owners diverting their routes away from the Red Sea and Suez Canal to the longer passage past southern Africa. Initially, there were fears that the involvement of the US and UK navies meant a serious escalation in hostilities across the Middle East. But these concerns have moderated as there has been no impact on Middle Eastern oil production so far.”
