On Tuesday, oil prices declined due to an unclear outlook for global demand, even with some risk premium from the Israel-Hamas war. The crew of a ship abandoned the ship following the attack on Sunday night, adding to the tensions in the Red Sea. This is the first evacuation of this kind since the Yemen-based gang began attacking ships in the latter part of last year.
At $83.34 per barrel, Brent futures fell 22 cents, or 0.26 percent. In another indication of a tighter market, the six-month spread for Brent was at its biggest level since October on Tuesday. After dropping $1 earlier, US West Texas Intermediate (WTI) crude for April delivery dropped 26 cents, or 0.33 percent, to $78.20 per barrel.
Update on crude oil prices
According to a statement from IG market analyst Tony Sycamore, crude prices were “marginally lower” during “quiet trading over the Presidents’ Day holiday in the US and as demand concerns offset ongoing Middle Eastern geopolitical tensions”.
A cease-fire between Israel and Hamas in Gaza is being pushed for by a number of nations as the possibility of an Israeli attack on Rafah grows. According to the U.N., an attack “could lead to a slaughter”.
With the Middle East war threatening to worsen, shipping has suffered, with energy markets being especially vulnerable. Iran-aligned Houthis have stepped up their attacks on Red Sea and Bab al-Mandab Strait shipping lines in support of Palestinians; since then, at least four more vessels have been struck by drone and missile strikes.
The growth estimate for oil demand in 2024 was cut downward by the pessimistic International Energy Agency (IEA) report last week, to about a million barrels per day less than the producer club OPEC’s prediction.
The IEA, which represents industrialized nations, predicts that oil demand will peak by 2030, whereas OPEC anticipates that oil use will continue to rise for the following 20 years. This is one area of disagreement between the two about the transition to cleaner, renewable energy.
