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Updated December 28th, 2023 at 13:44 IST

Oil Prices stabilise as disruptions around Red Sea eases

Brent crude futures inched up 2 cents to $79.75 a barrel while US WTI crude futures traded 3 cents lower at $74.08 a barrel.

Oil tanker attacked Red Sea
The ship came under attack hours after another ship was attacked off the Gujarat coast. Image used for representative purposes only. | Image: Unspalsh
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Oil prices steadied on Thursday as concerns over shipping disruptions along the Red Sea route eased, even with escalating tensions in the Middle East.

Brent crude futures inched up 2 cents to $79.75 a barrel while US WTI crude futures traded 3 cents lower at $74.08 a barrel. This follows a nearly 2 per cent drop on Wednesday when major shipping firms began resuming operations in the Red Sea.

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The recent concerns about shipping disruptions in the Red Sea have abated, with significant shipping companies returning to the region. Danish shipping giant Maersk has scheduled dozens of container vessels to traverse the Suez Canal and Red Sea in the coming weeks after temporarily halting routes due to attacks by Yemen's Iran-backed Houthi militia.

Despite the relief in shipping disruptions, escalating tensions in the Middle East, particularly involving Iran's role in the region, continue to impact market sentiment. The uncertainty surrounding a potential prolonged Israeli military campaign in Gaza and its spillover effects on Red Sea shipping remains a key driver for investors.

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Hiroyuki Kikukawa, President of NS Trading, a unit of Nissan Securities, noted that while concerns about Red Sea shipping have eased, lingering worries about Middle East tensions, especially Iran's involvement, make it challenging for further selling. The market is anticipated to test the upside again, possibly in the early new year. Expectations include a potential recovery in fuel demand due to monetary easing in the United States and increased kerosene demand during the winter in the northern hemisphere.

Investor focus remains on the upcoming US government data on fuel stockpiles, delayed by a day due to the Christmas holiday. Data from the American Petroleum Institute on Wednesday showed a surprising increase in crude stocks by 1.84 million barrels, contrary to analyst estimates for a 2.7 million-barrel decrease.

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(With Reuters inputs) 
 

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Published December 28th, 2023 at 13:44 IST

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