Oil Prices Hold onto Advances Amid Worries Over Red Sea
On February 27, oil prices largely maintained gains from the previous day amid attacks on shipping in the Red Sea, intensifying concerns about the global supply. Brent crude futures saw a marginal drop of 1 cent, settling at $82.52 a barrel, while U.S. West Texas Intermediate crude futures (WTI) rose by 1 cent to reach $77.59 a barrel.
The attacks by Iran-aligned Houthis supporting Palestinians have impacted freight rates and shipping times. The recent attempt by the Houthis to launch a missile at the U.S.-flagged oil tanker Torm Thor in the Gulf of Aden on February 24 has heightened tensions.
U.S. President Joe Biden expressed hope for a ceasefire in the Israel-Hamas conflict in Gaza by following Monday. However, public statements indicate a significant gap between Israel and Hamas on the possibility of a truce.
Both oil benchmarks experienced over a 1% increase on Monday, reversing declines seen in the previous week. The market’s perception of a delayed possibility of rate cuts contributed to the recent fluctuations.
Kansas City Federal Reserve Bank President Jeffrey Schmid’s debut speech signaled a reluctance to rush into interest rate cuts, aligning with the stance of many central banking colleagues. High borrowing costs, often associated with reduced economic growth, can impact oil demand.
Tuesday’s Oil prices also supported signs of improved demand in China. Despite concerns over Chinese demand, refineries continue robust buying in the physical market after increased Lunar New Year travel, even with planned maintenance halts.
A key focus will be the American Petroleum Institute’s weekly data on U.S. crude inventories, scheduled for release at 4:30 p.m. EST (2130 GMT). The ongoing geopolitical tensions and their impact on global oil supply and demand dynamics will likely keep the oil market on edge in the coming days.
