ISLAMABAD
Oil futures edged up slightly last week as fears about the Red Sea supply disruptions continue to rise on mounting tension in the Middle East. Major global benchmark Brent ended the week higher by 0.34 percent. Brent, the international benchmark for two-thirds of the world’s oil, rose to $78.56 a barrel from $78.29 a barrel during the week under review, showing an increase of $0.27 on a week-on-week (WoW) basis.
Other global benchmark West Texas Intermediate (WTI), the main oil benchmark for North America, also closed the week higher to $73.41 from $72.68 a barrel, registering a weekly increase of $0.73 (+1 percent).
Both benchmarks registered minor losses in the preceding week. Brent ended last week lower by 0.60 percent, falling to $78.29 a barrel from $78.76 a barrel on a week-on-week, while WTI closed last week down to $72.68 from $73.81 a barrel, registering a weekly decline of 1.53 percent. Both benchmarks shed more than 10 percent in 2023 on a year-on-year basis.
Geopolitical tension in the Middle East is continuing to rise amid the Israel-Gaza conflict, stoking fears that it could engulf the entire region and disrupt oil supplies from the Middle East. Yemen’s Houthi militants, who say they are acting in solidarity with Palestinians, intensified attacks on ships passing through the Red Sea, a key waterway connecting Asia and Europe.
Bab El Mandeb, on the southern edge of the Red Sea, is a route for oil tankers and cargo ships sailing between the Arabian Gulf and Asia, as well as to Europe through the Suez Canal. About 12 percent of the world’s seaborne oil trade and 8 percent of liquefied natural gas pass through the strait.
Many shipping companies have suspended their operations along the Red Sea and are forced to travel through the longer Cape of Good Hope route at the southern tip of Africa to transport goods to Europe and other destinations amid Houthi attacks.
On the other hand, the International Energy Agency (IEA) expects oil demand to grow by 1.24 million barrels per day (bpd) in 2024, up 180,000 bpd from its previous projection, its monthly report said. The agency cited improved economic growth and lower crude prices in the fourth quarter.
The Organization of the Petroleum Producing Countries (OPEC) said last week that global oil demand growth is expected to record robust annual growth of 1.8 million barrels per day in 2025.
Demand in Organisation for Economic Cooperation and Development member countries is expected to grow by 0.1 million bpd, while demand in the non-OECD states is forecast to increase by 1.7 million bpd, according to the Opec report. Other incidents like Iran capturing an oil tanker off the coast of Oman and the US-led coalition launching multiple attacks on Yemen have kept oil prices on track, it added.
The US carried out more strikes on the Houthis on Thursday, destroying anti-ship missiles the White House said the Iran-backed rebels were planning to use for attacks in the Red Sea.
