Daily Times

Crude oil prices climbed on Friday after falling 3 percent in the previous session as more shipping giants prepared to resume traversing the Red Sea despite an ongoing Houthi missile barrage.

As of 1200 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.50 (+0.65 percent) to reach $77.65 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.34 (+0.47 percent) to $72.11 a barrel. Brent ended the last week higher by 3.29 percent while WTI registered an uptick of 2.98 percent.

Oil prices are set for a weekly decline while the two benchmarks are also on track for their lowest year-end levels since 2020, when the pandemic battered demand and sent prices nosediving.

Oil prices have continued to track down on faith that a US-led international task force, dubbed Prosperity Guardian, will be able to protect merchant vessels from Houthi targeting in the Red Sea, on the way to the Suez Canal.

Earlier on Wednesday, Danish shipping giant Maersk confirmed it had scheduled dozens of vessels for the Suez Canal, via the Red Sea, in the coming weeks after a temporary halt. The Houthis are targeting merchant vessels going through the Bab al-Mandab Strait between Djibouti and Yemen. U.S. Central Naval Command has released data showing a minimum of 15 commercial ships attached by the Houthis in November and December, with the most recent attack on Tuesday, December 26.

While Maersk and others are resuming shipping in the Red Sea, using evasive maneuver, Germany’s Hapag-Lloyd said on Wednesday that it would not be following suit, deeming the Suez Canal route still too dangerous despite US military protection. Instead, the shipping giant will reroute vessels via the Cape of Good Hope, which adds 3,500 nautical miles to the trip and a concomitant increase in shipping costs. Hapag-Lloyd is the fifth-largest shipping company in the world by capacity.

Meanwhile, oil prices are set to end 2023 about 10 percent lower after two years of gains as geopolitical concerns, production cuts and central bank measures to rein in inflation triggered wild fluctuations in prices. Production cuts by the Organization of the Petroleum Exporting Countries and allies led by Russia (OPEC+) have proved insufficient to prop up prices, with the benchmarks down nearly 20 percent from the year’s highs.

OPEC+ is currently cutting output by around 6 million barrels per day representing about 6 percent of global supply. OPEC is facing weakening demand for its crude in the first half of 2024 just as its global market share declines to the lowest since the COVID-19 pandemic on output cuts and member Angola’s exit.