(London) Oil prices fell on Wednesday, weighed down by an increase in maritime exports of Russian crude, despite concerns over tensions in the Red Sea which could have consequences on the transport of black gold.
Around 5:40 a.m. (Eastern time), the price of a barrel of North Sea Brent, for delivery in March, lost 0.32%, to $75.65.
Its American equivalent, the barrel of West Texas Intermediate (WTI), for delivery in February, fell by 0.47%, to 70.06 dollars, shortly after having slipped below the 70 dollar mark.
Prices are losing ground despite “persistent concerns over (crude) shipping via the Red Sea, as the market appears to focus more on bearish signals such as concerns over the global economy,” explain Energi analysts Denmark.
In addition to “demand-related uncertainties”, prices remain under pressure due to “the increase in global supply, in particular from non-OPEC producers (Organization of the Petroleum Exporting Countries, Editor’s note)”, explains John Plassard of Mirabaud, mentioning record production levels in the United States and Brazil.
And even among some alliance allies, the offer is also strengthening. “Russian maritime oil exports increased […] to 3.78 million barrels per day last week, ending the year on a high,” say DNB analysts.
But “even if the oil supply has not been affected” by the tensions in the Red Sea, “as evidenced by the fall in crude prices, the nervousness is obvious,” underlines Tamas Varga, analyst at PVM Energy.
In recent weeks, in the wake of the war between Israel and Hamas, Yemen’s Houthi rebels have increased attacks in the Red Sea and the Bab el-Mandeb Strait through which 12% of world trade passes.
The Houthis, supported by Iran like the Palestinian Hamas, have warned that they will target, in solidarity with Gaza, ships sailing in the Red Sea and having links with Israel.
“A significant escalation of tensions in the region […] could potentially lead to oil supply disruptions in addition to rerouting ships, leading to longer voyage times and higher insurance,” says Varga .
On the European natural gas side, the Dutch TTF futures contract, considered the European benchmark, was trading at 31.63 euros per megawatt hour (MWh), up more than 3%.
Prices rose again on Wednesday after approaching 30 euros per MWh the day before, with weather forecasts predicting colder weather this week in Northern Europe.
However, temperatures should rise at the end of January, reflecting on demand, and the “overall supply situation remains very solid at the start of the year”, maintain Energi Danmark analysts, who are counting on further price drops.