Oil Prices Surge Amid Disruption Concerns Following Latest Red Sea Attack

Oil prices experienced an increase in the first session of the new year, driven by potential supply disruptions in the Middle East following the latest attack on a container ship in the Red Sea. Additionally, hopes for increased Chinese demand contributed to the positive momentum.

As of the report, Brent crude rose by 49 cents, or 0.6%, reaching $77.53 a barrel, while U.S. West Texas Intermediate crude increased by 36 cents, or 0.5%, to $72.01. Earlier trading saw both benchmarks gaining around $2. The market reacts to geopolitical concerns and expectations for continued demand from major consumers like China.

According to an economist and expert survey conducted by Reuters, the average price of Brent crude is forecast to be $82.56 a barrel this year, a little higher than the $82.17 average in 2023, as poor global growth is anticipated to limit demand. However, price support may come from geopolitical issues.

With the help of U.S. helicopters, Houthi troops backed by Iran launched an attack on a Maersk cargo ship in the Red Sea on Sunday. The attack resulted in the sinking of three Houthi vessels and the deaths of ten terrorists, increasing the likelihood that the Israel-Hamas war may spread.

Following the incident, a representative for Danish shipper Maersk stated that the business would decide on Tuesday whether to send ships via the Red Sea and the Suez Canal again or reroute them around Africa.