Oil prices edge up as traders eye Red Sea developments

A container ship crosses an oil platform at the Gulf of Suez towards the Red Sea before entering the Suez Canal, outside of Cairo, Egypt Sept 1, 2020. REUTERS/Amr Abdallah Dalsh/File Photo

SINGAPORE  – Oil prices ticked higher on Monday after rising more than 1 percent in the previous session on jitters over global trade disruption and geopolitical tensions in the Middle East following Houthi attacks on ships in the Red Sea.

Brent crude futures edged up 6 cents, or 0.1 percent, 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 percent.

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 vowed to defy a U.S.-led naval mission and to keep targeting Red Sea shipping in support of Palestinian enclave Gaza’s ruling Hamas movement.

READ: Oil jumps more than 3% on Red Sea tanker attack, reroutings

About 12 percent of world shipping traffic passes up the Red Sea and through the Suez Canal. However, the impact on oil supply has been limited so far, analysts said, as the bulk of Middle East crude is exported via the Strait of Hormuz.

The U.S. bought 2.1 million barrels of crude for delivery in February, its Energy Department said on Tuesday, bringing total purchases to about 11 million barrels as it continued to replenish the Strategic Petroleum Reserve (SPR) after the largest sale in history last year.

U.S. crude and fuel inventories also rose last week, sources said, citing data from the American Petroleum Institute, against analysts’ expectations of a decline in crude stocks in a Reuters poll.

The U.S. Energy Information Administration (EIA) will publish official U.S. stocks data at 10:30 a.m. ET (1530 GMT) on Wednesday.

READ: OPEC sticks to 2024 oil demand growth forecast

S&P Global Commodity Insights said looking ahead, the U.S. is producing more oil than any country in history, leading strong non-OPEC+ supply growth that will more than meet growing global demand in 2024.

U.S. total liquids production in fourth quarter stands at 21.4 million barrels per day (bpd), of which 13.3 million bpd is crude and condensate, the firm added.

“Not only is the United States producing more oil than any country in history, but the amount of oil (crude oil, refined products and natural gas liquids) that it is exporting is near the total production of Saudi Arabia or Russia,” Jim Burkhard, a vice president at S&P Global said in a note.