In the wake of recent strikes by US and British forces to thwart Houthi militia attacks on ships in the Red Sea, oil prices saw a modest increase on Monday. Brent crude futures rose by 0.2 percent to reach US$78.42 a barrel, while US West Texas Intermediate crude experienced a 0.1 percent uptick, settling at US$72.73 a barrel.
The escalation in tensions arose from the strikes, which aimed to prevent Houthi militia in Yemen from targeting vessels in the Red Sea. Last Friday, Brent crude futures had settled 1.1 percent higher, and US West Texas Intermediate crude gained nearly 1 percent in the previous session.
Last week, both benchmarks recorded a significant surge of more than 2 percent, reaching their highest intraday levels of the year. This surge came in the aftermath of the joint military intervention by US and British forces, responding to months of Houthi attacks on Red Sea shipping. The Houthi forces justified their actions as a response to the conflict in Gaza.
Warren Patterson, the Head of Commodities Research at ING, highlighted the potential supply risks in the market due to the escalating situation in the Red Sea. However, as of now, there has been no observable impact on oil supply. Patterson emphasized that a substantial escalation would be required before such an impact becomes evident.
Traders and analysts continue to monitor the developments in the region closely, with the situation in the Middle East adding an element of uncertainty to the global oil market. The aftermath of the recent strikes raises questions about the potential for further disruptions and the resilience of oil supply chains in the face of geopolitical tensions. -BLOOMBERG
