The front-month contract for Brent crude North Sea oil was last seen up USD 0.46 at USD 78.34/bbl, while the WTI equivalent was USD 0.69 higher on the day at USD 73.25/bbl.
The US has carried out a fourth round of strikes on sites controlled by the Houthis in Yemen, with Tomahawk missiles fired from US Navy vessels in the region, various media reported overnight. The strikes followed further attacks by the Houthis on commercial shipping in the Red Sea, one of the world’s busiest shipping lanes.
"Another commercial vessel was attacked yesterday, taking the total tally so far this week to three. As a growing number of ships avoid the Red Sea, it is clearly disruptive to trade flows,” said analysts at ING bank.
“However, for now, price action in oil suggests that the market is assuming we do not see an escalation in the situation.”
Indeed, the international Brent crude benchmark has held within a USD 72-82/bbl range since the start of December.
The Houthis, designated as “global terrorists” by the US, have been attacking merchant vessels since November in retaliation for Israel’s military operation in Gaza. They have carried out more than two dozen attacks, while the US and UK retaliated with air strikes on Houthi targets earlier this month.
Also, said analysts at ANZ bank, there are “growing concerns that Iran may be drawn into conflict, with neighbours Iraq and Pakistan reporting recent attacks by Tehran”.
Elsewhere, the ANZ analysts pointed out that production at Libya’s Sharara oil field remains shut by protesters, while loadings of Azeri Light crude are expected to fall to a 11-month low. “Together this is impacting around [0.2m bbl/day] of exports.”
In the US, meanwhile, freezing temperatures have curbed output in Texas and shut in more than half of North Dakota’s production, with around 0.7m bbl/day of shale output offline, ANZ noted.
On the demand front, Opec forecast global crude oil consumption growth at 2.25m bbl/day for this year, unchanged from its outlook a month ago, while demand growth in 2025 would be 1.85m bbl/day.
And with non-Opec oil production expected to grow by 1.34m bbl/day this year and 1.27m bbl/day in 2025, the demand for Opec oil would be 28.5m bbl/day in 2024 and 29m bbl/day in 2025, noted the ING bank analysts, citing the cartel’s latest monthly report.
The figures suggest that Opec sees the market “in a fairly large deficit this year”, said ING, pointing out that Opec produced 26.7m bbl/day in December, excluding Angola.
The International Energy Agency is due to release its latest monthly forecast on global oil demand and supply later this morning.