Source: Wall Street News

Affected by the worsening situation in the Red Sea, international oil prices continued to rise before the market in the US market on Friday. WTI crude oil and Brent crude oil both rose more than 4% during the day at their highest.

Among them, the highest price of WTI crude oil hit 75.25 US dollars. As of press release, the intraday increase was 4.39%.

The highest intraday price of Brent crude oil was 80.75 US dollars/barrel. As of press release, the increase was 3.93%.

On Friday, the US and Britain carried out air strikes on several Houthi military targets in Yemen to deal with attacks on Red Sea shipping by Iran-backed groups. Oil prices rose in response to concerns that Red Sea shipping would be further disrupted.

Subsequent developments have heightened this concern. Yemeni Houthi spokesman Mohammed Abdulsalam said on social media on the 12th that there is no justification for the US and British air strikes on Yemen, and the Houthis will continue to attack ships linked to Israel:

We are certain that there is absolutely no justification for the aggression against Yemen, since international navigation in the Red Sea and the Arabian Sea is not threatened, and the targets (of the Houthis) were and will be Israeli ships or ships bound for occupied Palestinian ports.

Today, several tankers are turning halfway through the Red Sea. The Danish tanker group Torm also said on Friday that it has decided to suspend all transit through the southern Red Sea.

Red Sea conflict intensifies

On Thursday, shipping giant Maersk CEO Vincent Clerc said in an interview that it may take months to reopen important Red Sea trade routes, which could have an economic and inflationary impact on the global economy, businesses, and consumers.

Earlier, Wall Street News quoted media reports:

The situation in the Red Sea has forced some tankers to bypass the Cape of Good Hope in Africa, and many refiners and crude oil buyers go to the US to make alternative purchases. Some oil companies also said that their cooperating shipping companies will insist on following the original route through the Red Sea and will not bypass the Cape of Good Hope in Africa. According to reports, the latter will take an additional two weeks and cost more.

Since the Houthis attack on merchant ships in the Red Sea in Yemen, the flow of petroleum products in this area has declined sharply.

Viktor Katona, an analyst at shipping tracking company Kpler, once pointed out that the flow of crude oil and refined oil such as diesel and gasoline through the Suez Canal in December dropped by about 40% compared to October.

The Houthis attack focused on the Bab Mandab Strait in the southwestern part of the Arabian Peninsula. Previously, Iran's seizure was closer to the Strait of Hormuz between Oman and Iran, and the Gulf of Oman is very close to the Strait of Hormuz and is a key hub in oil transportation. ING analysts said in a note:

More than 20 million barrels of oil pass through the Strait of Hormuz every day, accounting for about 20% of global consumption.

Saul Kavonic, an energy analyst at MST Marquee, said:

If most of the flow in the Strait of Hormuz is blocked, it could impact oil prices three times that of the 1970s. In addition, it could exacerbate the crisis in the gas supply chain.

Is there still a “sense of security” in supply

Prior to the “air strike,” the mainstream opinion in the market was that the Red Sea conflict would not have too much impact on oil prices, because it was convinced that “the supply in the global market is sufficient.”

Last week, Richard Bronze, head of geopolitics at research firm Energy Aspects, said, “It will take a lot of effort to restore the continued rise in oil prices.”

But as the impact of conflict on shipping becomes more variable, prices in the crude oil market seem to be revealing the fragility of this “sense of security.”

edit/ruby