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Oil prices rise amid Red Sea shipping attacks

Oil prices unfazed despite Iran-Israel conflict
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February 27, 2024 (MLN): Oil prices ticked higher on Tuesday driven by supply concerns arising from attacks on shipping in the Red Sea.

Brent crude is currently trading at $81.76 per barrel, up by 0.17% on the day.

While West Texas Intermediate crude (WTI) is trading at $77.52 per barrel, up by 0.19% compared to the previous close.

"Concerns around shipping disruptions in the Red Sea have supported a rebound in the price of crude oil overnight, offsetting a more hawkish Fed currently weighing on the demand side of the equation," said Tony Sycamore, an analyst at IG in Sydney, as Reuters reported.

The attacks by Iran-aligned Houthis in support of Palestinians have increased freight rates and shipping times.

On Monday, U.S. Central Command said that the Houthis had unsuccessfully fired a missile at the U.S. flagged oil tanker Torm Thor in the Gulf of Aden on Feb. 24.

U.S. President Joe Biden said on Monday he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday.

In public, Israel and Hamas continued to take positions far apart on a possible truce, while blaming each other for delays.

Both oil benchmarks settled more than 1% higher on Monday which followed declines of 2%-3% over the previous week as markets factored in a greater likelihood that rate cuts might take longer to come.

Kansas City Federal Reserve Bank President Jeffrey Schmid on Monday used a debut speech on policy to signal that he, like most of his central banking colleagues, is in no rush to cut interest rates. High borrowing costs typically reduce economic growth and oil demand.

Oil prices were also supported on Tuesday by indications of improved demand in China.

"Concerns over Chinese demand are abating, as refineries continue brisk buying in the physical market after a boom in Lunar New Year travel. This is despite them having planned more maintenance halts than usual," analysts from ANZ Bank said in a note.

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Posted on: 2024-02-27T11:49:17+05:00