Brent crude price rose by 0.3% to $82 per barrel on Tuesday, January 30, 2024.
A Nairametrics review of global crude oil prices as of 02:05 GMT+1, revealed that Brent was trading at $82.65 per barbarrel
In addition, the benchmark price for U.S. West Texas Intermediate crude futures (WTI) also shsshows rise of 0.4%, to $77.09 a barrel.
Although the contracts faced a substantial drop of over $1 on Monday, driven by escalating worries about Chinese demand in the face of an intensifying real estate crisis. The situation was exacerbated by a Hong Kong court’s directive to liquidate the prominent China Evergrande Group.
Meanwhile, analysts noted that the market is tense due to increasing concerns about oil supply, with Washington pledging to take “all necessary actions” in response to a deadly drone attack in Jordan by Iran-backed militants.
This incident marks the first U.S. military casualties since the start of the Israel-Gaza war.
Last week, Nairemetrics reported that the U.S. initiated fresh strikes against Iran-aligned Houthi rebels in Yemen on Friday, responding to a Houthi assault on a Greek vessel in the Red Sea.
However, a Sunday’s attack by Iran-backed militants killed three U.S. troops in Jordan, while Qatar said it hoped U.S. retaliation would not damage regional security or undercut progress toward a new Gaza hostage-release deal.
Effect of Conflict in the Red Sea on Crude Oil Price
Over the weekend, an assault on a Trafigura oil tanker in the Red Sea has heightened concerns about potential disruptions to the oil supply. ANZ analysts noted that the escalating risk of U.S. involvement in the the conflict is adding to the overall uncertainty in the situation.
In the majority of 2023, Iran exported 1.2-1.6 million barrels of crude oil per day, making up 1-1.5% of the global oil supply.
- “If U.S.-Iran tensions escalate, particularly throirectntaarises the risk rises that Iran’s oil supply is adversely impacted. Iranian’s oil exports are likely the most vulnerable via potentially greater enforcement of sanctionresponds Iran responds to rising U.S. tensions will also dictate the course for oil markets. The key concern is Iran threatening a blockade of the Strait of Hormuz, which sees the transit of 15-20% of global oil supply,” said Commonwealth Bank of Australia analyst.
More Insights on Oil Price Gains
The increase in oil prices precedes an upcoming Federal Reserve rate decision, with the Federal Open Market Committee (FOMC) commencing a two-day meeting starting on Tuesday.
Policymakers are expected to hold interest rates steady, but some investors believe the U.S. central bank could drop its hiking bias.
Meanwhile, U.S. crude oil and distillates inventories were expected to have fallen last week while gasoline stocks were seen rising, a Reuters poll showed.
The American Petroleum Institute industry group will publish U.S. stockpiles data on Tuesday at 4:30 pm EST (2130 GMT), while data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due at 10:30 a.m. EST (1530 GMT) on Wednesday.
