Eyes on the Red Sea crisis and OPEC in oil

Oil advanced on its biggest weekly gain in two months as carriers avoided the Red Sea amid escalating attacks, while Angola’s departure from OPEC highlighted the group’s unity. Global benchmark Brent traded around $80 a barrel and was set for a second week of gains after seven straight declines, while U.S. crude traded above $74 a barrel. Tanker traffic in the Red Sea fell after Yemen’s Iran-backed Houthi rebels stepped up attacks on ships in the region. Angola announced it would leave OPEC after 16 years, highlighting tensions within the group of producers as they seek to curb output to support prices heading into the new year. Crude is headed for its first annual decline since 2020 as the Organization of the Petroleum Exporting Countries and its allies try to counter rising output outside the group, led by record output in the United States. Meanwhile, the demand outlook has soured as the International Energy Agency reiterated that it expects growth to slow significantly next year. “Red Sea tensions have boosted prices significantly, but this has been offset by uncertainty about supply. While it’s more of a wait-and-see situation for oil, if OPEC+ output cuts come to the table, it will be hard for prices to find support,” said Will Sungchil Yun, senior commodities analyst at SI Securities. Angola has rejected a reduced production limit imposed by OPEC leaders to reflect the country’s shrinking capacity. While the country is unlikely to make a significant contribution to global supply in the near term, its exit from the cartel signals disagreement and could renew doubts that all members will stick to their promised output cuts.