Oil prices fell on Tuesday after marking a surge amid news that Iran-supported Houthi rebels sent a warship into the Red Sea.
Brent crude,
the international standard, fell 1.5% to $75.89 a barrel Tuesday, after rising nearly 3% earlier in the day.
West Texas Intermediate
(WTI), the U.S. benchmark, fell 1.8% to $70.38 a barrel.
Iran sent a warship into the Red Sea, state media reported Monday after the U.S. fought off a Houthi attack on a
Maersk
container ship, Reuters reported. The danger is that the Israel-Hamas war, which has so far been contained, could spread into a wider regional conflict involving some of the biggest oil producers.
Maersk, a Danish shipping and logistics company, said Tuesday it has decided to pause all transits through the Red Sea / Gulf of Aden until further notice. The company on Sunday had announced a pause until Jan. 2 after one of its vessels was attacked by four boats.
The rebels have been attacking vessels passing through one of the world’s most active shipping routes to protest Israel’s actions against Hamas. Several companies have said they are rerouting shipments around the Red Sea, increasing costs and adding weeks to delivery times.
While heightened geopolitical tensions have been pushing up oil prices, other pressures are acting to keep them lower. There are worries that economic growth will be weak this year, especially in China, which will blunt demand.
The Organization of the Petroleum Exporting Countries has also struggled to agree on production cuts to prop up prices. Last month, the bloc lost a member when Angola dropped out.
WTI prices have fallen 20% in the past three months and are still about 12% lower than they were this time last year.
Write to Brian Swint at [email protected] and Karishma Vanjani at [email protected]
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