Oil jumps above $80 as tensions persist in the Red Sea
Shafaq News / Oil prices surged by up to 1% on Friday due to ongoing tensions in the Middle East stemming from Houthi assaults on ships in the Red Sea. However, Angola's choice to exit OPEC has raised uncertainties regarding the group's ability to effectively bolster prices.
Brent crude futures were up 86 cents, or 1.1%, to $80.25 a barrel by 04:09 GMT, while US West Texas Intermediate crude futures were up 81 cents, or 1.1%, at $74.70 a barrel.
Both the contracts are also up over 4% for a second consecutive week, as concern over shipping in the Red Sea buoyed prices.
Oil prices could see a rebound "due to the geopolitical conflicts and the imminent implementation of OPEC's production cuts," said Leon Li, an analyst at CMC Markets in Shanghai.
"So a small supply gap is likely to occur in January next year, and WTI crude oil may rise to $75-$80 per barrel."
More maritime carriers are avoiding the Red Sea due to vessel attacks carried out in support of Palestinians by the Yemeni Houthi militant group, causing global trade disruptions through the Suez Canal, which handles about 12% of worldwide trade.
Germany's Hapag-Lloyd and Hong Kong's OOCL were the latest companies to say they would avoid the Red Sea by rerouting ships or suspending sailing.
The US on Tuesday launched a multinational operation to safeguard commerce in the Red Sea, but the Houthis said they would continue to carry on attacks.
Analysts say the impact on oil supply has been limited, as the bulk of Middle East crude is exported via the Strait of Hormuz.
Capping further gains though, Angola's oil minister said on Thursday that the country's membership in the Organization of the Petroleum Exporting Countries was not serving its interests. Angola had previously protested a decision by the wider OPEC+ group to reduce the country's oil output quota for 2024.
The Saudi-led producer group in recent months has been rallying support to deepen output cuts and boost oil prices.
Saudi Arabia, Russia, and other members of OPEC+, who pump more than 40% of the world's oil, agreed to voluntary output cuts totaling about 2.2 million barrels per day (bpd) for the first quarter of 2024.
(Reuters)
