Oil edged lower on Dec. 19 after the U.S. announced the creation of a task force to safeguard Red Sea commerce from attacks by Iran-backed Yemeni militants, which have disrupted maritime trade and forced companies to reroute vessels.
Crude climbed nearly 2% on Dec. 18 after a Norwegian-owned vessel was attacked and BP said it had paused all transit through the Red Sea, raising concern over supply disruption. About 12% of world shipping traffic passes through the Suez Canal.
Brent crude slipped $0.22, or 0.3%, to $77.73 a barrel by 1310 GMT. WTI crude for January, which expires on Dec. 19, was down $0.42 at $72.05 while the more active February contract CLc2 lost 27 cents.
Though the attacks on shipping have boosted the geopolitical risk premium, "the actual effect on oil flows is likely to be limited", said John Evans of oil broker PVM.
"The attacks have not hit anything that would interfere with production," he said.
The U.K., Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain are among nations involved in the operation.
Goldman Sachs analysts said the disruption is unlikely to have a large effect on crude and LNG prices because opportunities to reroute vessels suggest that production should not be directly affected.
Oil major BP has temporarily halted transit through the Red Sea and oil tanker group Frontline on Dec. 18 said its vessels would avoid the route - signs that the crisis was broadening to include energy shipments.
Also in focus this week will be the latest snapshot of U.S. supplies. U.S. crude inventories are expected to decline by 2.2 MMbbl, a Reuters poll showed.
The first of the week's two supply reports, from the American Petroleum Institute, is due at 2130 GMT.
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