Yemen’s Houthi Red Sea attacks and fresh Jordan violence weigh on oil as Middle East unease widens
Oil prices have fallen today amidst a brief detente from the surge seen over the weekend following various attacks across the Middle East.
Brent crude futures dipped 46 cents to $81.89 (£64.47) as of 10:20 GMT, still markedly up from the $80.44 posted last Friday lunchtime.
The shift comes after a weekend dominated by acts of aggression against Western powers in the Middle East.
Three US troops were killed by a drone attack on a military base yesterday that the White House has attributed to Irani militants in north-east Jordan.
Houthi militants, a group in Yemen, have also stepped up attacks on vessels in the Red Sea in recent days.
Singaporean oil and commodities giant Trafigura, said its ship, the Marlin Luanda, was struck by a Houthi rebel missile as it transited the Red Sea’s Gulf of Aden on Friday.
The shot caused the Marshall Islands-flagged ship to issue a distress call on Friday and reported damage, including a blaze that raged for hours.
The company is said to be reconsidering using the Red Sea route for the immediate future.
Western firms are still avoiding the region as a goods transit route and shipping costs have soared as a result of companies taking longer alternative routes.
Shipping analyst Ed Finley-Richardson noted on Twitter that February and March future prices for one of the most common oil tanker classes, the LR1, have risen by 10 per cent.
He told City PM, “If Red Sea disruption really continues as it is now, and even more tankers go around, we could see spot rates head higher.
“It seems difficult to imagine Trafigura, Glencore etc continuing to go through with the images we have of a tanker on fire for 24 hours circulating in the media, the potential for reputation damage is very high.”
Meanwhile, a Hong Kong court on Monday finally ordered the liquidation of property giant China Evergrande Group in a sign of a deepening crisis in China’s real estate sector, knocking sentiment on crude demand in the world’s largest oil importer.
Shares in oil majors BP and Shell have risen 1.9 and 1.5 per cent respectively today.