Oil prices supported as US, UK launch new attack on Houthi rebels in Red Sea
The Red Sea crisis does provide short-term support for oil prices, but we also see that energy stocks have not performed well recently, being the only one of the S & P 11 sectors to move lower in the last three months。
Oil prices stayed up after the United States and Britain launched a new round of attacks on Iran-backed Houthi rebels in Yemen, raising tensions in the Middle East and offsetting fears of plentiful global supplies.。
Brent crude, the global benchmark, held steady near $80 a barrel after rising nearly 2 percent on Monday, while West Texas Intermediate crude was below $75.。US and British forces have launched the latest attack on eight targets of Houthi rebels to prevent the group from attacking commercial vessels in the Red Sea.。
Crude ended the week's rally at the start of the week following reports of Ukrainian drone attacks on energy facilities off Russia's Baltic coast。This opens a new front in the conflict between the two countries nearly two years after the Moscow invasion。
Despite multiple geopolitical tensions and a commitment by the Organization of Petroleum Exporting Countries to limit production, crude has struggled to determine a clear direction this year.。Oil's gains were offset by signs of ample output from producers outside OPEC, with the International Energy Agency forecasting ample supply.。In addition, Libya has restarted production from its largest oil field after a shutdown, and U.S. drilling workers are recovering from the cold weather that affected operations.。
Robert Lenny, head of commodities and carbon research at Westpac, said: "The Russian attack is an important reminder that we have ongoing conflict in two important energy producing regions.。He added that oil stocks should tighten further as US production was affected by severe weather and OPEC + production cuts were about to take effect, although the resumption of supplies from Libya's Shalala field would help ease some of the tensions.。
On Monday, Brent crude oil prices closed above $80 a barrel for the first time this year.。Its spot spread (the difference between the two most recent contracts) is an inverse spread of 45 cents per barrel, which is a bullish near-term structure.。On the first trading day of 2024, there was only a 3-cent reverse spread.。
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