Oil prices surged globally following a US military strike on Iran-backed Houthi rebels, who have been targeting commercial ships in the Red Sea. On Monday, the price of crude oil increased by nearly 1%, with a further rise of 0.25% on Tuesday morning.
Since November 2023, the Houthis have launched over 100 attacks on vessels in the Red Sea, citing solidarity with Palestinians affected by Israeli airstrikes in Gaza. These missile and drone attacks have forced the US to engage in costly military operations. Despite previous efforts, the US administration had not been able to curb the threat, leading to renewed strikes on the Houthi group.
As a result, oil futures saw a significant increase. On Monday, Brent Crude futures rose by 1.02%, reaching $71.3 per barrel, while US West Texas Intermediate (WTI) crude increased by 1.1%, reaching $67.90 per barrel. On Tuesday, both Brent Crude and WTI saw a further rise of 0.25%, with Brent at $71.32 and WTI at $67.83.
While the Russia-Ukraine war and various Middle Eastern uncertainties had caused price fluctuations, crude oil prices had remained relatively stable in recent months. Despite a brief surge in January when prices surpassed $80 per barrel, the prices had recently dropped back to the $70 range due to slowed global economic growth, particularly in China.
The price of crude oil had been rising since 2021, particularly following the Russia-Ukraine conflict in 2022, when prices peaked at $139 per barrel. In 2023, prices briefly reached $98 per barrel but settled at an average of $83. Even with OPEC’s decisions to limit production, prices have not seen a substantial increase.
Liberty News’ economic correspondent states that for 2024, oil prices are expected to remain around $70 per barrel, with supply exceeding demand. According to the International Energy Agency (IEA), global supply will surpass daily demand by 600,000 barrels, largely due to increased production in the US and reduced demand from China. As a result, oil prices are expected to remain stable throughout the year.
LND/BG
