Oil price remains sideways due to crisis in the Red Sea

Oil was flat after two days of gains as investors and shippers braced for more disruptions in the Red Sea. Global benchmark Brent was around $79 a barrel after rising more than 3% in the previous two sessions. U.S. crude rose above $74. The United States and its allies are weighing possible military strikes against Iran-backed Houthi rebels in Yemen, conscious that a previously announced task force may not be enough to eliminate the threat to shipping in the vital waterway. Rising geopolitical risks have added value to an oil market buffeted by doubts that OPEC+ will stick to its production cuts and concerns about increased supply from outside the cartel, particularly the United States. Oil prices have fallen by nearly a fifth since late September on expectations of a glut and the regional fallout from the Israel-Hamas war remaining under control. ANZ Group Holdings senior commodity strategist Daniel Hynes said while the escalating tensions in the Red Sea had not significantly changed the outlook for oil, it could signal a potential escalation of the conflict, which could have significant ramifications. The Red Sea is a vital trading channel for oil and has become important for barrels from Russia after European buyers stayed away from Russian-bound barrels bound for Asia due to the invasion of Ukraine. Russia’s seaborne crude exports rose again on a four-week average basis, despite a decline in weekly flows due to a brief halt in shipments from the Baltic port of Primorsk.