Red Sea Safety Impacts Oil Prices
December 19, 2023
Our office is closed on Friday December 22 so there will be no forward contracts available on Friday December 22, 2023.
Energy prices gained support yesterday on the back of several major shipping firms saying they would avoid the Red Sea. Oil Major BP came out later in the day and said they had paused all transit through the Red Sea stating the safety and security of our people and those working on our behalf is BP’s priority.
The United States has come out and said it is leading a multinational operation to protect shipping in the Red Sea. The US has already shot down several rockets and drones in the area of the Red Sea.
About 15% of the world shipping transits via the Suez Canal, the shortest shipping route between Europe and Asia.
The markets are mixed here in early trading and the number of traders and the volume for the rest of the week should continue to decline as many traders extend their Christmas break.
This current situation with shipping just adds to the uncertainty around the Middle East and keeps the market on edge.
After just writing yesterday that Goldman Sachs had the most bullish outlook, they cut their forecast for Brent crude oil in 2024 by $10 per barrel to between $70 and $90 saying strong production from the United States would moderate any upside in oil prices.