Oil prices are at mixed rates amid Red Sea attacks
Oil prices were mixed on Tuesday, with the US benchmark dipping cut rates while Brent extended gains from the previous session, as attacks by Yemen's Iran- aligned Houthi militants on ships in the Red sea disrupted maritime trade and forced companies to reroute vessels.
Brent crude futures rose 10 cents, or 0.13 percent, to $78.05 a barrel. The front-month US West Texas Intermediate crude futures contract, which expires on Tuesday, fell 7 cents to $72.40 a barrel. The more active second-month contract was down 5 cents, or 0.07 percent, to $72.77. Both benchmarks rose more than 1 percent on Monday on concerns about shippers diverting vessels away from the Red sea.
Despite price stabilization, the potential risks caused by supply disruptions and the Middle East unrest could bring significant volatility to oil markets. Oil market may face further upside pressure if geopolitical tensions get escalated.
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The shipping attacks have prompted the United States and its allies to discuss a task force that would protect Red Sea routes. The United States has announced the launch of a multinational force to protect trade in the Red Sea after attacks by Yemen's Houthi rebels forced at least a dozen shipping lines to suspend operations.
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The shipping diversions could result in significantly slower shipments and potentially higher prices for consumers. The disruption would likely affect the supply of consumer goods ahead of the new year in particular, with delays leaving retailers with unsellable stock and ultimately driving up prices for consumers. BP [oil major firm] has paused Red sea shipments following efforts to combat the situation.
It is most probably possible for international markets to rise oil prices as per official data. This would be considered as aftermath of disrupted supply chains by Houthis attack and one of the fundamental reason after pandemic, to disrupt oil market.
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