Crude futures were higher on Wednesday, but it was the first time oil prices have risen since the day after Christmas, even as rising tensions in the Red Sea raised the risk that a wider conflict in the Middle East would disrupt oil flows in the region.
Matt Smith, chief analyst for the Americas at Kpler, told MarketWatch that although concerns over the past week that blocked shipping in the Red Sea would disrupt oil supplies had little impact on oil prices, unrest in Iran, a major oil producer, pushed oil prices to rebound on Wednesday. Smith said: “Protesters disrupted activities at El Sharara, Libya’s largest oil field, further bullish oil prices.”
West Texas Intermediate oil futures for February delivery on the New York Mercantile Exchange rose $2.32, or 3.3%, to a settlement price of $72.70 a barrel; the settlement price of the March Brent crude oil contract on the Intercontinental European Futures Exchange (ICE Futures Europe) It was quoted at US$78.25 per barrel, up US$2.36, or 3.1%.
On Tuesday, both benchmark crude oil prices fell for a fourth consecutive session and hit their lowest settlement prices since December 13, 2023.
Iranian state media reported that an explosion occurred near a cemetery in Iran and caused casualties. The cemetery was holding a ceremony to commemorate the fourth anniversary of the death of General Qassem Soleimani, the former commander of the elite Quds Force of the Revolutionary Guards. ceremony. He died in a US drone strike in Iraq in January 2020.
There are also reports that Libya’s largest oil field has been shut down due to protests. The Sharara oil field has been a frequent target of protesters and armed groups since the fall of former Libyan leader Muammar Gadhafi in 2011, according to S&P Global Commodity Insights.
Still, the hostilities did not significantly boost oil prices because oil production was not affected, said Denton Cinquegrana, chief oil industry analyst at Dow Jones’ Oil Price Information Service (OPIS).
He believes that “the biggest impact is on the cost and time of shipping” rather than the risk of tankers transiting the Red Sea.
Major shipping companies suspended shipments through the Red Sea route in mid-to-late December 2023 due to attacks by the Iran-backed Houthi rebel group in Yemen on ships transiting the waterway, which is home to crude oil, refined products and other consumer goods. main transport routes.
Analysts at Commerzbank wrote in a note on Wednesday that Houthi rebels’ recent shelling of container ships and oil tankers in the Red Sea “increases the risk of supply disruptions that are likely to have occurred since mid-December (oil ) one of the reasons for the price increase.”
These analysts said that some shipping companies are now no longer using the affected strait and are instead taking longer routes around the Cape of Good Hope, which “not only adds 10-12 days to delivery times, but also increases transportation costs.” and insurance costs”.
As a result, they said, Brent crude oil forward contracts have shifted to a backwardation structure, after the six forward contracts with the closest delivery times all showed a backwardation structure in the first half of December.
The so-called underpricing structure means that the price of the near-month delivery contract is higher than the price of the far-month contract. Under the parity structure, futures prices for future delivery are higher than the spot market, which may encourage traders to increase inventory.
These analysts at Commerzbank said that the situation in the Red Sea became more tense at the beginning of the new year.
Iran reportedly dispatched a warship to the Red Sea after the U.S. military sank three Houthi vessels over the weekend. The Houthis were previously accused of attacking a cargo ship operated by Maersk.
Stephen Innes, managing partner of SPI Asset Management, said in market commentary that Iran sent a 51-year-old frigate to monitor the Red Sea waterways. A frigate is a type of warship.
“This situation reflects a pattern of Iranian propaganda that is not very subtle or subtle,” he said.
However, analysts at Commerzbank said Iran’s actions “could lead to further restrictions on this important maritime oil trade route to the West, driving up oil prices.”
(This article is translated from MarketWatch. MarketWatch is operated by Dow Jones, the parent company of The Wall Street Journal, but MarketWatch is independent from Dow Jones Newswires and The Wall Street Journal.)
2024-01-04 04:35:00
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