Oil prices rose nearly 1% in early Asian trading on Monday, supported by decreased exports from Russia and increased fears of supply disruptions due to Houthi attacks on ships in the Red Sea.
Price action
Futures contracts for Brent crude rose by 0.9% to $77.24 a barrel at 0037 GMT, while West Texas Intermediate crude rose by 0.9% to $72.08 per barrel in the US.
Tony Sycamore, Market Analyst at IG Markets, attributed the morning’s higher prices to bad weather in Russia and a Houthi attack on ships near Yemen.
Russia announced on Sunday that it will cut oil exports by 50,000 barrels per day in December – an amount more significant than previously promised – to support global oil prices.
At the start of this week, some of the biggest shipping companies, such as MSC and A.P. Muller, announced that they would be avoiding the Suez Canal due to the increasing attacks by the Houthis in Yemen on commercial ships sailing through the Red Sea.
Bab al-Mandab is a crucial city for international shipments of goods by sea, especially crude oil and fuel from the Gulf to the Mediterranean. It is also an essential route for goods east to Asia, including Russian oil. This city serves as a gateway for transportation through the Suez Canal or the nearby SUMED pipeline.
Brent and West crude ended Texas Intermediate’s longest streak of weekly declines in half a decade, with slight gains after the Federal Reserve (the US central bank) meeting last week. The discussion raised hopes of ending interest rate hikes and discounts, respectively.
