January 15, 2024 (MLN): Oil prices started the week on a positive note, fueled by potential supply concerns arising from rising tensions in the Middle East.

Brent crude is currently trading at $78.18 per barrel, up by 0.14% on the day.

Meanwhile, West Texas Intermediate crude (WTI) is trading at $72.83 per barrel, up by 0.04% compared to the previous close.

Both benchmarks dropped 0.8% and 1.48% respectively last week as the price cuts by Saudi Arabia and the rise in OPEC output weighed dominant over the market.

Several tanker owners steered clear of the Red Sea and multiple tankers changed course on Friday following the strikes, although traders were still watching out for Iran's response and impact on shipments in the Strait of Hormuz, the world's most important oil chokepoint, as Reuters reported.

"As the Middle East conflict is currently not affecting oil production, the geopolitical risk premium priced in oil prices now appears modest based on the implied volatility of options," Goldman Sachs analysts said in a note.

"While unlikely to materialize in our view, we estimate that oil prices would rise 20% in the first month of a Strait of Hormuz interruption, and may temporarily double in a less likely extended disruption."

In Libya, people protesting against perceived corruption threatened to shut down two more oil and gas facilities after shutting the 300,000 barrel-per-day Sharara field on Jan. 7.

In the U.S., power and natural gas companies were preparing for extreme cold over the Martin Luther King Day holiday weekend that was expected to cause record gas demand while also cutting supplies by freezing wells.

The Texas power grid operator on Sunday issued an appeal to the public calling for energy conservation.

Copyright Mettis Link News

Posted on: 2024-01-15T10:35:46+05:00