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.
Recommended Reading
E&P Highlights: Jan. 6, 2025
2025-01-06 - Here’s a roundup of the latest E&P headlines, including company resignations and promotions and the acquisition of an oilfield service and supply company.
Analysts’ Oilfield Services Forecast: Muddling Through 2025
2025-01-21 - Industry analysts see flat spending and production affecting key OFS players in the year ahead.
E&P Highlights: Jan. 21, 2025
2025-01-21 - Here’s a roundup of the latest E&P headlines, with Flowserve getting a contract from ADNOC and a couple of offshore oil and gas discoveries.
Baker Hughes, Frontier Form CCS, Powergen Partnership
2025-03-03 - Baker Hughes will provide technology solutions to support the Sweetwater Carbon Storage Hub being developed by Frontier Infrastructure in Wyoming.
E&P Highlights: Feb. 10, 2025
2025-02-10 - Here’s a roundup of the latest E&P headlines, from a Beetaloo well stimulated in Australia to new oil production in China.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.