Positive Movement in Brent Crude and U.S. West Texas Intermediate Crude
Brent crude futures saw a climb of 69 cents, or 0.9%, reaching $77.24 a barrel by 0037 GMT. Meanwhile, U.S. West Texas Intermediate crude rose by 65 cents, also 0.9%, settling at $72.08 a barrel.
“The bad weather in Russia has played a part in the stronger open this morning, as has the Houthis’ attack on ships close to Yemen,” explained IG analyst Tony Sycamore.
Russia Deepens Oil Export Cuts and Suez Canal Avoidance
Russia announced on Sunday its decision to deepen oil export cuts in December, potentially reducing export by 50,000 barrels per day or more earlier than planned. This move is part of an effort by the world’s largest exporters to bolster global oil prices.
Moscow suspended about two-thirds of loadings of its main export grade Urals crude due to a storm and scheduled maintenance on Friday. This suspension affected shipping firms, with major container shipping lines MSC and A.P. Moller-Maersk deciding to avoid the Suez Canal. Their decision comes as Houthi militants in Yemen increase their attacks on commercial vessels in the Red Sea.
Impact on Global Seaborne Commodity Shipments
The Bab al-Mandab route is one of the world’s most vital routes for global seaborne commodity shipments. It plays a crucial role in transporting crude oil and fuel from the Gulf to the Mediterranean via the Suez Canal or the nearby SUMED pipeline. It is also a significant route for commodities heading eastward to Asia, including Russian oil.
Weekly Decline Streak Ends, Hope for Interest Rate Cuts
Last week, both Brent crude and U.S. West Texas Intermediate crude broke their streak of consecutive weekly declines, which had lasted for half a decade. This break resulted in a small gain after a U.S. Federal Reserve meeting raised expectations of upcoming interest rate cuts.