Brent crude above $80 as Middle East tensions persist
Angola’s decision to quit Opec because of output quotas raises questions about cartel’s effectiveness
22 December 2023 - 07:42
byEmily Chow
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Singapore — Oil prices rose as much as 1% on Friday as tensions persisted in the Middle East after Houthi attacks on ships in the Red Sea, though Angola’s decision to leave Opec raised questions over the group’s effectiveness in supporting prices.
Brent crude futures were up 86c, or 1.1%, to $80.25 a barrel by 4.09am GMT, while US West Texas Intermediate (WTI) crude futures were up 81c, or 1.1%, at $74.70 a barrel.
Both the contracts are up more than 4% for a second consecutive week, as concern over shipping in the Red Sea buoyed prices.
Oil prices could see a rebound “due to the geopolitical conflicts and the imminent implementation of Opec’s production cuts”, said Leon Li, an analyst at CMC Markets in Shanghai. “So a small supply gap is likely to occur in January next year, and WTI crude oil may rise to $75-$80 per barrel.”
More maritime carriers are avoiding the Red Sea due to vessel attacks carried out in support of Palestinians by Yemeni Houthi militant group, causing global trade disruptions through the Suez Canal, which handles about 12% of worldwide trade.
Germany’s Hapag-Lloyd and Hong Kong’s OOCL are the latest companies to say they will avoid the Red Sea by rerouting ships or suspending sailing.
The US on Tuesday launched a multinational operation to safeguard commerce in the Red Sea, but the Houthis said they will continue their attacks.
Analysts say the impact on oil supply so far has been limited, as the bulk of Middle East crude is exported via the Strait of Hormuz.
Capping further gains, Angola’s oil minister said on Thursday that the country’s membership of Opec is not serving its interests. Angola had previously protested against a decision by the wider Opec+ group to reduce the country’s oil output quota for 2024.
The Saudi-led producer group in recent months has been rallying support to deepen output cuts and boost oil prices.
Saudi Arabia, Russia and other members of Opec+, which pump more than 40% of the world’s oil, agreed to voluntary output cuts totalling about 2.2-million barrels for the first quarter of 2024.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Brent crude above $80 as Middle East tensions persist
Angola’s decision to quit Opec because of output quotas raises questions about cartel’s effectiveness
Singapore — Oil prices rose as much as 1% on Friday as tensions persisted in the Middle East after Houthi attacks on ships in the Red Sea, though Angola’s decision to leave Opec raised questions over the group’s effectiveness in supporting prices.
Brent crude futures were up 86c, or 1.1%, to $80.25 a barrel by 4.09am GMT, while US West Texas Intermediate (WTI) crude futures were up 81c, or 1.1%, at $74.70 a barrel.
Both the contracts are up more than 4% for a second consecutive week, as concern over shipping in the Red Sea buoyed prices.
Oil prices could see a rebound “due to the geopolitical conflicts and the imminent implementation of Opec’s production cuts”, said Leon Li, an analyst at CMC Markets in Shanghai. “So a small supply gap is likely to occur in January next year, and WTI crude oil may rise to $75-$80 per barrel.”
More maritime carriers are avoiding the Red Sea due to vessel attacks carried out in support of Palestinians by Yemeni Houthi militant group, causing global trade disruptions through the Suez Canal, which handles about 12% of worldwide trade.
Germany’s Hapag-Lloyd and Hong Kong’s OOCL are the latest companies to say they will avoid the Red Sea by rerouting ships or suspending sailing.
The US on Tuesday launched a multinational operation to safeguard commerce in the Red Sea, but the Houthis said they will continue their attacks.
Analysts say the impact on oil supply so far has been limited, as the bulk of Middle East crude is exported via the Strait of Hormuz.
Capping further gains, Angola’s oil minister said on Thursday that the country’s membership of Opec is not serving its interests. Angola had previously protested against a decision by the wider Opec+ group to reduce the country’s oil output quota for 2024.
The Saudi-led producer group in recent months has been rallying support to deepen output cuts and boost oil prices.
Saudi Arabia, Russia and other members of Opec+, which pump more than 40% of the world’s oil, agreed to voluntary output cuts totalling about 2.2-million barrels for the first quarter of 2024.
Reuters
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