Oil prices witnessed a robust start to the New Year, surging over two per cent in the first trading session. The spike was attributed to potential disruptions in Middle East supply chains following the recent attack on a container ship in the Red Sea.
Brent crude rose by USD 1.72, or 2.2 per cent, reaching USD 78.76 a barrel, while US West Texas Intermediate crude experienced a similar increase, up USD 1.57, or 2.2 per cent, reaching USD 73.22.
Geopolitical tensions escalated as US helicopters successfully repelled an attack by Iran-backed Houthi forces on a Maersk container vessel in the Red Sea on Sunday. The confrontation resulted in the sinking of three Houthi vessels and the death of 10 militants. This incident has heightened concerns of the Israel-Hamas conflict expanding into a broader regional conflict, potentially impacting vital waterways crucial for oil transportation.
In response to the heightened tensions, at least four tankers carrying diesel and jet fuel from the Middle East and India to Europe are now taking alternative routes, circumventing the Red Sea. Ship tracking data reveals these vessels opting to sail around Africa to avoid potential disruptions and ensure the safe passage of their cargo.
Meanwhile, in China, economic stimulus expectations gained momentum after government data revealed a third consecutive month of shrinking manufacturing activity in December. Investors anticipate fresh measures to stimulate economic growth, which could, in turn, drive an increase in oil demand and provide additional support to crude prices.
(Inputs from Reuters)
