Crude Rallies As Red Sea Situation Deteriorates

Oil prices are higher during APAC trading today following further attacks on shipping in the Red Sea by Iran-backed Houthi rebels over the weekend and now tensions have been increased by Iran sending a warship to the waterway. It is a major route for oil and gas shipments. Brent is up 1.6% to $78.25/bbl, but still below last Thursday’s highs, and WTI is +1.4% to $72.67/bbl. The USD index is 0.2% higher.

• Maersk has again said it will divert ships around southern Africa in response to the latest Houthi attack. The risks in the area have meant that half of the Red Sea’s container traffic is finding alternative routes and as well as some tankers.
• Despite geopolitics, the market remains concerned about demand and supply trends and so OPEC compliance with quotas and China’s economy are likely to be monitored closely.
• Later today the US S&P Global manufacturing PMI for December and November construction data are released. There are also European PMIs.