Houthi Attack Affects Global Oil Market, US Plans Revenge!


 Recently, oil prices were little changed as many investors looked at the impact on oil supplies after an attack by the Houthi group, which is Iran's ally in Yemen, on a ship in the Red Sea.

This situation is seen to disrupt maritime trade and force companies to divert ship routes.

Brent crude rose 6 cents to $78.01 a barrel and US West Texas Intermediate (WTI) crude for next month fell 18 cents to $72.29 a barrel. The contract in a more active second month fell 0.1% to $72.72.

Both benchmarks rose more than 1% on Monday amid concerns about shippers diverting ships from the Red Sea.

According to Jun Rong Yeap, a strategist at IG Singapore, the immediate and collective response from various countries to counter the attack may have undermined the strong confidence throughout the disruption. That has a big impact on crude oil prices today.

For now, BP temporarily halts all transit in the Red Sea. An oil tanker company, Frontline has announced it will avoid using waterways as the widening strike crisis affects energy deliveries.

The Suez Canal is an important route for global shipping, handling almost 15% of the world's shipping traffic as an alternative to shorten the route between Europe and Asia by connecting the Red Sea to the Mediterranean Sea.

Goldman Sachs analysts believe that the disruption of routes by the Houthis in the Red Sea is unlikely to have a significant impact on crude and liquefied natural gas (LNG) prices because ships still have the ability to change routes.

They estimated that a prolonged withdrawal of 7 million barrels of crude oil per day would result in a moderate increase of $3 to $4 per barrel over the old price.

Recent shipping attacks have prompted the United States and its allies to hold talks to establish a task force to protect the Red Sea route. However, Iran, a former arch-enemy of the US, warned against the move.

Meanwhile, Iran's Oil Minister, Javad Owji, in his statement last Monday, confirmed the occurrence of disruptions across the country to gas stations due to cyber attacks. The hacking group is suspected of having ties to Israel.

The United States will seek more information to enforce sanctions against Russia's crude oil business. US officials have also acknowledged that much of the trade has escaped Western scrutiny after Russia built its parallel fleet.