Brent rises as Houthis end lull in Red Sea shipping threats
The front-month ICE Brent contract has moved $0.66/bbl higher on the day, to trade at $69.27/bbl at 09.00 GMT.
IMAGE: Getty Images
Upward pressure:
A recent Houthi attack on a cargo ship in the Red Sea has added upward pressure on Brent futures.
Yemen-based Houthi militants carried out their first assault on a commercial vessel in nearly six months, according to the United States Naval Institute (USNI). The Magic Seas, a Liberian-flagged, Greek-owned bulk carrier en route from Zhuhai, China, to the Suez Canal, was targeted on 6 July off the coast of Hodeidah, Yemen.
“Increased attacks on vessels passing through the Red Sea by the Houthis in Yemen provided further support to the market yesterday,” analysts at ING Bank noted.
Oil prices are also being supported by a tightening middle distillates market.
“The [global] middle distillate market continues to show increasing signs of tightness,” ING Bank analysts commented.
“Distillate inventories are critically low, causing a diesel shortage… Globally, distillate supplies remain tight, with Europe and Asia affected by refinery constraints, reduced Russian exports, and rising demand,” Phil Flynn, senior market analyst at Price Futures Group, added.
Downward pressure:
US President Donald Trump informed trade partners on Monday that significantly higher US tariffs would take effect from 1 August, though he later clarified the deadline was “not 100% firm,” according to Reuters.
The announcement has triggered uncertainty across financial markets and raised concerns about potential negative impacts on the global economy and oil demand, putting some downward pressure on Brent futures.
While oil prices have largely shrugged off a larger-than-expected OPEC supply increase scheduled for August, “the spectre of another 548kb/d [548,000 b/d] hike in September would raise the risk of inventories beginning to build as seasonal demand wanes,” ANZ Bank’s senior commodity strategist Daniel Hynes said.
By Tuhin Roy
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