Benzinga - by Neil Dennis, Benzinga Staff Writer.
After a sluggish close to 2023, oil prices are creeping higher in 2024 in response to the risks of an escalation of hostilities in the Middle East and Red Sea — crucial oil production and transportation regions.
So far in 2024, Nymex WTI, the benchmark for U.S. crude oil prices, is up nearly 8% at $77.30 a barrel, after slipping below $70 in December. European benchmark Brent crude is up 6% at $82.09.
The biggest exchange traded fund by assets under management, the United States Oil Fund (NYSE:USO) has climbed 9.2%.
Despite the ongoing conflict between Israel and Hamas and attacks on ships in the Red Sea by Houthi rebels, oil prices continued to decline throughout November and December, primarily due to weak demand in a market that was well-supplied.
Also Read: Energy Stocks ‘A Hedge Against Things Getting More Out of Control’ In Middle East
Iran Tensions With US
On Wednesday, Warren Patterson, head of commodity strategy at ING said: “The biggest upside risk for the oil market is if tensions in the Middle East spread, which starts to have an impact on oil production or cuts off oil flows that cannot be rerouted.”
Iran has signalled that it would “decisively respond” to any retaliatory attack by the U.S. following a drone strike by Iran-backed militants in Jordan that injured dozens of U.S. troops.
Iran has been among the chief agents behind the shipping attacks in the Red Sea, providing the funding and weapons for Houthi strikes.
While the Red Sea is not a major center of oil-production, it is an important shipping lane for goods and commodities heading to Europe and the U.S. East Coast — but shipments can be rerouted around Africa. It takes longer and is more costly, but deliveries arrive.
Saudi Aramco To Go Ahead With Share Offer
Citing people familiar with the matter, Bloomberg said the offering could come as early as February. The largely state-owned oil producer raised $25.6 billion in 2019, when it completed the world’s biggest initial public offering, and went on to sell a further $4 billion in shares a few months later.
There were no details on what the funds were being raised for, but the news followed a government order on Tuesday for Aramco to halt oil expansion plans.
Shares in global oil majors were lower on Wednesday, taking a break from a run of gains in recent sessions. ExxonMobil (NYSE:XOM) fell 1.1% to $103.65, while Chevron (NYSE:CVX) lost 0.8% to $148.90 and ConocoPhillips (NYSE:COP) shed 1.5% to $112.34 at the time of publication.
Now Read: Aramco Halts Plan To Increase Maximum Crude Production Capacity Amid Oil Demand Uncertainty
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