Oil prices increased by up to 1% on Friday due to ongoing tensions in the Middle East following Houthi attacks on ships in the Red Sea. However, Angola’s recent decision to withdraw from OPEC raises concerns about the organization’s effectiveness in maintaining prices.
According to Reuters, Brent crude futures rose by 1.1%, or 86 cents, to $80.25 per barrel, while US West Texas Intermediate oil futures rose 1.1% or 81 cents to $74.70 per barrel.
For the second consecutive week, both contracts rose by more than 4% due to concerns over shipping in the Red Sea, causing prices to surge higher.
An increasing number of shipping companies are steering clear of the Red Sea to avoid attacks on ships that Yemen’s Houthi armed group is carrying out in support of the Palestinians. This has led to disruptions in global trade as the Suez Canal, which sees about 12% of global trade passing through it, is affected.
Germany’s Hapag-Lloyd and Hong Kong’s OOCL are avoiding the Red Sea by rerouting ships or suspending sailings.
On Tuesday, the United States launched a multinational operation to protect trade in the Red Sea, but the Houthis said they would continue to launch attacks.
Analysts suggest that the supply of oil has been minimally affected, as most of the crude oil from the Middle East is transported through the Strait of Hormuz.
On Thursday, the Angolan Oil Minister announced that his country’s membership in the Organization of the Petroleum Exporting Countries (OPEC) was not beneficial to Angola’s interests. Angola had previously protested against the decision made by the OPEC+ group to reduce its oil production quota for 2024, which has been causing a hindrance to the country’s further gains.
In recent months, the Saudi-led group of oil producers have worked together to cut production and increase oil prices.
Saudi Arabia, Russia, and other OPEC+ members have agreed to voluntary oil production cuts of 2.2 million barrels per day in Q1 2022, which account for over 40% of the world’s oil output.
