Brent crude price rose by 2. 3% to $79 per barrel on Friday, January 12 2024.
A Nairametrics review of global crude oil prices as of 01:54 GMT+1, revealed that Brent was trading $79.22 per barrel.
Experts observed that the increase in prices of Brent crude and West Texas Intermediate (WTI) benchmarks occurred due the United States and Britain carried out strikes against Houthi military targets in Yemen in retaliation for attacks by the Iran-backed group on shipping in the Red Sea starting from late last year.
According to Reuters, the recent U.S. and British airstrikes represent a significant and dramatic escalation in the ongoing Israel-Hamas conflict in the Middle East, which began in October. Reports from Yemen indicate widespread explosions throughout the country.
U.S. President Joe Biden said the “targeted strikes” were a clear message that the United States and its partners will not tolerate attacks on its personnel or “allow hostile actors to imperil freedom of navigation”.
Australia, Bahrain, Canada and the Netherlands supported the operation, he said.
15% Rise in World Shipping Traffic
- Moreover, Houthi assaults in the Red Sea have disturbed global trade along the crucial route connecting Europe and Asia, constituting approximately 15% of the world’s maritime traffic.
- Since October, the Houthis have targeted commercial ships in the Red Sea as a demonstration of solidarity with the Palestinian militant group Hamas in its conflict against Israel.
- As a result, Maersk, the shipping giant (MAERSKb.CO), announced on Thursday its decision to reroute all vessels away from the Red Sea indefinitely, cautioning customers about potential additional disruptions.
- The recent U.S.-led strikes come shortly after Iran seized a tanker on Thursday, carrying Iraqi crude intended for Turkey. This action is seen as retaliation for the U.S. confiscating the same vessel and its oil last year.
- The White House has expressed condemnation for the seizure.
- The Houthi attacks have been concentrated on the Bab al-Mandab Strait to the southwest of the Arabian Peninsula. Iran’s seizure was closer to the Strait of Hormuz between Oman and Iran.
More Insights
A recent survey by Bloomberg showed that the Organization of Petroleum Exporting Countries (OPEC) crude oil production maintained a steady production of crude oil with an average of 28.05 million bpd in December 2023 with Nigeria boosting output by an extra 50,000 bpd.
OPEC+ sustained supply restraints from countries like the United Arab Emirates and Angola cutting back on production. However, other countries like Nigeria compensated for the reduction.
The latest data published by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reveals that the country’s daily oil production stands at 1.25 million barrels, with the information conveyed through its “direct communication” channels.
- In addition, OPEC+ also projected that Nigeria would produce 1.5 million bpd in 2024, although the federal government protected the country can produce as high as 2 million bpd this year.
- Meanwhile, Saudi Arabia and other Middle Eastern countries maintained strong compliance with their announced production cuts, even implementing additional voluntary reductions, contributing to this decline.
- OPEC+ had previously announced 2.2 million bpd of cuts for the first quarter of 2024, but these include Saudi Arabia rolling over its voluntary cut, Russia deepening crude and fuel export cuts by 200,000 bpd, and several other OPEC+ members announcing voluntary production reductions for the first quarter of 2024.
