Oil Prices Rose As Traders Look For Developments In The Red Sea

On Monday, oil prices saw an upward trend as it rose more than 1% in the previous session. This is due to problems in global trade disruption as well as geopolitical tensions in the Middle East. The tensions increased after commercial vessels came across Houthi attacks near Yemen.

According to CNBC,

?Brent crude futures edged up 6 cents, or 0.1%, to $79.29 a barrel by 0137 GMT while U.S. West Texas Intermediate crude was at $74.11 a barrel, up 17 cents, or 0.2%. Washington on Tuesday launched a task force to safeguard Red Sea commerce as attacks by Iran-backed Yemeni militants forced major shipping companies to reroute, stoking fears of sustained disruptions to global trade.?

The Houthis actually defied a US-led naval mission and continued to target Red Sea shipping. They are doing it as a support to the Hamas movement in Palestinian Gaza.

The Red Sea and the Suez Canal are part of the most famous sea routes in the world, and about 12% of the world?s shipping traffic passes through the area. However, due to tensions in the Middle East, the impact of oil supply was limited. The export of Middle East crude is done through the Strait of Hormuz.

As per the statement of the Energy Department, the United States bought 2.1 million barrels of crude. Those shall be delivered in February. Hence, the total purchases of the US amounted to 11 million barrels as the state continued to replenish its Strategic Petroleum Reserve. Last year?s purchases created a record as the largest sale in history.

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Soumava Goswami

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