A photo taken during an organized Houthi rebel tour of Yemen on November 22, 2023 shows the cargo ship Galaxy Leader approaching port in the Red Sea off Yemen's Hodeidah Governorate.
-| AFP | Getty Images
Oil prices rose on Tuesday after Iran sent a warship to the Red Sea, as the situation remains tense in the vital waterway for global shipments that has seen attacks on ships by Yemen's Houthi rebels.
Brent crude, the global benchmark, jumped 1.6% to $78.27 a barrel, while US West Texas Intermediate crude rose 1.42% to $72.67 a barrel during Asian trading hours.
Oil prices last year
“Any escalation of the conflict in this region will certainly add further risk premium to Brent,” Neil Beveridge, senior energy analyst at Bernstein, told CNBC. But he indicated that there will not be any significant impact yet.
He added: “We have not seen Iranian naval incursions before. As long as they don't really lead to any escalation, I don't really see any significant impact at this level.”
I also want to get your perspective broadly on the oil markets and, you know, the whole supply and demand mismatch where there are concerns about oversupply, what does that mean for all prices? Because it has been fairly stable, largely ignoring what could lead to downward pressure on oil prices.
The Houthi group is attacking ships in the Red Sea, targeting Israeli ships and other ships heading to and from Israel, in response to the war the country is waging in Gaza, which has resulted in deaths so far. Nearly 22,000 people are there.
Major shipping companies stopped crossing the Suez Canal and Red Sea routes in early December, choosing to reroute via South Africa instead – a longer and more expensive journey with sea freight rates reaching $10,000 per container.
German container shipping company Hapag-Lloyd said on Friday that it will continue to divert its ships around the Suez Canal.
However, the US launch of Operation Prosperity Sentinel, a multinational naval force, boosted shipping companies' confidence. Danish shipping giant Maersk It said Sunday it would resume operations In the Red Sea and Gulf of Aden.
“Infuriatingly humble analyst. Bacon maven. Proud food specialist. Certified reader. Avid writer. Zombie advocate. Incurable problem solver.”