Red Sea Conflicts Continue to Impact Markets
January 26, 2024
Crude oil prices traded up to a 2-month high yesterday driven by the report of US GDP for Q4 2023 rising more than expected. This news, along with other good economic data helped to support the rally. The US Bureau of Statistics reported the 1st estimate of GDP for Q4 2023 rose by 3.3% from Q3 2023. Economists expected a rise of only 2.0% and the actual 3.3% was even above the expected range (1.3%, 2.5%). Consumer spending rose by 2.8% for Q4, which was well above the 2.5% expected by the economists.
The activities in the Red Sea continue to impact prices and it appears the US gets more involved every single day. There is a little glimmer of hope in that China asked Iran to help rein in attacks on ships in the Red Sea by Iran-backed Houthis, or risk harming business relations with Beijing. This news has price a little softer in the start to today’s trading.
OPEC is pushing their February 1 meeting out a few weeks as they say it is too early to make any decision about April production. OPEC+ has done most of the work to keep production in check and support prices and it will be interesting to see what their next steps might be.