Oil pumps are seen, as oil and gas activity dips in the Eagle Ford Shale oil field due to the coronavirus disease (COVID-19) pandemic and the drop in demand for oil globally, in Karnes County, Texas, U.S., May 18, 2020. Picture taken May 18, 2020. Photographer Jennifer Hiller/File Photo
By Reuters
Oil rose on Monday as attacks by the Houthis on ships in the Red Sea raised concerns of oil supply disruptions and Russia’s plan to lower exports in December provided additional support.
Shipping firms, including the world’s biggest container shipping line MSC and A.P. Moller-Maersk, said over the weekend that they would avoid the Suez Canal as Houthi militants in Yemen stepped up their assaults on commercial vessels in the Red Sea.
Brent crude futures were up 17 cents, or 0.2%, to $76.72 a barrel by 0910 GMT, while U.S. West Texas Intermediate crude rose 48 cents, or 0.7%, to $71.91.
Both crude benchmarks posted small gains last week, following seven weeks of decline, after a U.S. Federal Reserve meeting last week raised hopes that interest rate hikes are over and cuts are on their way.
“The rise in geopolitical risk premium, which has come in the form of regular hostilities towards commercial vessels in the Red Sea by Iran-backed Houthi rebels plays its indisputable part in oil’s resurrection,” said Tamas Varga of oil broker PVM.
Also adding support, Russia said on Sunday it would deepen oil export cuts in December by potentially 50,000 barrels per day or more, earlier than promised, as the world’s biggest exporters try to support global oil prices.
This comes after Moscow suspended about two-thirds of loadings of its main export grade Urals crude from ports due to a storm and scheduled maintenance on Friday.
Oil was also supported by a weakened dollar, CMC Markets analyst Tina Teng said in a note, as a weaker dollar makes dollar-denominated oil cheaper for foreign buyers and tends to reflect greater investor risk appetite.