Daily Times

Crude oil prices rose over 2 percent on Tuesday amid fears about the Red Sea supply disruptions and hopes of an improving demand outlook in China.

As of 1130 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $1.73 (+2.25 percent) to reach $78.77 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $1.58 (+2.22 percent) to $73.23 a barrel. Brent and WTI ended the last week lower by 3.93 percent and 2.6 percent respectively. Crude futures recorded their biggest annual drop since 2020 last year at a time of record US oil production and a slowdown in major economies. On an annual basis, Brent ended 2023 more than 10 percent lower, while WTI dropped by nearly 11 percent.

Similarly, the price of Russian Sokol increased by $0.14 (+0.19 percent) to $73.36. Arab Light prices witnessed an increase of $0.15 (+0.18 percent) to reach $82.03 a barrel. On the other hand, the price for Opec Basket went down to $80.84 a barrel with a decrease of $0.40 (-0.49 percent). The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.

Meanwhile, the Yemeni Houthi rebel group on Sunday launched three anti-ship missiles at a commercial vessel, Maersk Hangzhou, a Singapore-flagged container ship. One struck it, causing damage but no casualties, while two of the missiles were shot down by the destroyer USS Gravely. The US said that a naval task force formed in December had shot down four ballistic missiles and 17 drones fired by the Iran-backed militia.

The Bab El Mandeb, located at the southern edge of the Red Sea, is a route for oil tankers and vessels between the Arabian Gulf and Asia, as well as to Europe by way of the Suez Canal. About 12 percent of the seaborne oil trade and 8 per cent of liquefied natural gas passes through the strait.

Meanwhile, manufacturing activity in China, the world’s second-largest economy, fell for the third month in a row, raising expectations of stimulus measures to revive growth. China’s official manufacturing purchasing managers’ index (PMI) fell to 49 last month from 49.4 in November, the third consecutive month of a reading below the neutral 50 mark, and below consensus expectations of an improvement to 49.6. The deterioration in the official manufacturing PMI stood in contrast to the Caixin manufacturing PMI reading, which rose above expectations, to 50.8 in December from 50.7 the month before.