Oil prices rise above $80 a barrel after attacks on tankers in the Red Sea
- Brent crude oil futures were 0.9% higher at $80.32 on Friday morning
- Houthi rebels claim to have attacked ships they believe are bound for Israel
- Many leading shipowners have diverted their voyages away from the Red Sea
Oil prices fell above $80 a barrel on Friday after shipping companies cut their traffic through the Red Sea following a series of attacks.
Brent Crude futures were up 0.9 percent in morning trading at $80.32, the highest since late November, before falling to $79.76 in the early afternoon, according to Morningstar.
Rebels from Yemen's Houthi movement claim to have carried out numerous attacks in the Bab-al-Mandab Strait in recent weeks on commercial ships they say are bound for Israel.
Danger: Oil prices climbed above $80 a barrel on Friday after shipping companies cut their traffic through the Red Sea following a series of attacks
As a result, many leading shipowners have diverted their voyages from the Red Sea, one of the world's busiest shipping lanes, which is directly connected to the Suez Canal.
Both Moller-Maersk and Hapag-Lloyd announced their ships would instead sail around the Cape of Good Hope in South Africa, costing millions of dollars and potentially adding an additional ten days to voyages.
Oil tanker groups Euronav and Frontline declared on December 18 that they would avoid the Red Sea, while energy giant BP followed suit a few days later, blaming the “deteriorating security situation.”
So far, oil prices and supplies have seen only limited impact from the Houthi attacks, as most Middle Eastern oil is transported through the Strait of Hormuz.
In addition, a multinational coalition led by the United States – called Operation Prosperity Guardian – has been launched to protect ships transiting the Red Sea.
Nevertheless, oil prices could rise significantly higher if the war between Israel and Hamas, which began on October 7, escalates into a broader regional conflagration.
Oil prices rose significantly in 2022 due to the gradual easing of Covid-related restrictions around the world and Russia's large-scale invasion of Ukraine.
Spot Brent crude prices averaged around $100 per barrel throughout the year, while the comparative figure for West Texas Intermediate was $95.
Although prices have fallen this year, they remain well above pre-pandemic levels, partly because some oil-producing countries are cutting production.
In late November, the Organization of the Petroleum Exporting Countries (OPEC) and Russia – a group known as OPEC+ – agreed to cut production levels by 2.2 million barrels per day in the first quarter of 2024.
On Thursday, Angola announced it would leave OPEC after a clash with Saudi Arabia over cuts to its production base.
Analysts do not expect the decision to dramatically affect oil prices as Angola is responsible for just under 2 percent of OPEC+ production, which totaled 43 million barrels per day last month, according to the International Energy Agency.