Oil prices rise on end-of-week geopolitical concerns

Oil prices rise on end-of-week geopolitical concerns

Oil prices rose at the end of last week, with Brent crude posting its biggest weekly gain since October,
driven by geopolitical concerns in the Red Sea that have disrupted crude supplies.

 

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Analysis

 

 

 

 

 

Details

Attacks by the Iran-backed Houthi group have forced more ships to divert widely to avoid the vital waterway,
leading to delays in oil shipments.

So far this week, only about 30 tankers, including crude and fuel tankers,
have entered the Bab al-Mandeb Strait at the southern tip of the Red Sea,
down more than 40% from the daily average over the past three weeks
as the Houthis target commercial ships in support of Hamas in its war with Israel.

News that Russia will cut its January export cuts also helped support oil prices,
as it reduced some of the negative impact of Red Sea concerns.

 

Still, oil prices are still on track to record their first annual decline since 2020, as rising production from the United States and elsewhere is at odds with efforts by the OPEC+ alliance to support the market by cutting production. Demand prospects also look fragile, with the International Energy Agency forecasting that growth will slow sharply next year.

 

 

 

 

 

Analysis

The rise in oil prices at the end of last week suggests that geopolitical concerns are still playing a significant role in supporting prices, as these concerns are a major factor in the recent market volatility.

However, there are still significant risks to oil prices,
as rising production from the United States and elsewhere is expected to continue to pressure prices.
Demand prospects are also still fragile, as global economic growth is expected to slow next year.

 

 

 

Oil prices rise on end-of-week geopolitical concerns