Oil prices have declined slightly, but remain near their highest level since early December, while market participants continue to monitor developments in the Red Sea.
Tankers shun the Red Sea on the back of heightened attacks which have disrupted international shipping routes. In recent weeks, Yemen’s Houthi rebels have launched a series of drone attacks against commercial ships crossing the Red Sea. Yesterday BP Plc said it would pause all shipments through the waterway and Equinor ASA said it's diverting vessels away. About 8% of the world’s crude transits through the Suez Canal, putting pressure on tanker utilization if ships are forced to take the longer route around South Africa. The U.S. has pledged an international effort to combat the situation, expanding a multinational maritime force in the Red Sea to safeguard against the attacks.
Meanwhile, Goldman Sachs analysts said the overall impact of escalating tensions in the Red Sea is likely to be limited. "It is unlikely that recent events will have a serious impact on oil and LNG prices, because vessel redirection opportunities imply that production should not be directly affected.
Oil received some support from the weakness of the US currency. Since the beginning of the month, the US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) has fallen by 0.9% after a decline of 2. 97% in November.