Oil prices extend gains on more Red Sea attacks

2023-12-19
Summary:

Iran-backed Houthi disruption fuels Tuesday's oil price surge, defying US warnings and impacting the Red Sea energy trade.

Oil prices extended its gains on Tuesday as Iran-backed Houthi militants continued to disrupt maritime energy trade in the Red Sea regardless of US threat.

BP has paused all transits through the Red Sea and Frontline said on Monday its vessels would avoid passage through the waterway, signs the conflict between Israel and Hamas may have greater impact than expected.


About 15% of world shipping traffic passes across the Suez Canal, which connects the Red Sea to the Mediterranean Sea. It is the shortest shipping route between Europe and Asia.


Russia said on Sunday it would deepen oil export cuts in December by potentially 50,000 bpd or more, earlier than promised at the Nov OPEC+ meeting.


Elsewhere Venezuelan state oil company PDVSA and Spain's REPSol signed an agreement, aiming to ramp up its output.


The US and Canada will produce more oil and gas this year than any other region in the world, according to a new analysis from S&P Global Commodity Insights.


The two countries are on track to produce more than 41 million bpd of oil and gas, whereas the Middle East produces about 38 million.

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China will see oil demand growth slowing next year, as the impact of pent-up appetite for travel and consumption following a three-year pandemic begins to fade away, according to a Bloomberg survey.


Brent crude rallied strongly to breach the resistance around $77.5, and the positive bias remains intact with descending trend line and the 200 SMA in sight.


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