On the Day of New Year crude oil starts with a positive outlook despite fears over demand due to a weaker world economy and increasing crude storages in the United States of America that have led the country to lower its rates in previous 2 months November and December 2023.
This jump in its prices was seen in the first session of 2024, leveraged by the hopes of Middle East supply disruptions after a naval clash in the Red Sea, as well as chances of positive holiday demand and an economic stimulus in China, the top importer of crude.
U.S. helicopters retreated from attacking on Sunday which were backed by Iran Houthi militants on a Maersk container vessel in the Red Sea, sinking three Houthi ships and killing 10 militants, fuelling risks of the Israel-Gaza war becoming a wider geopolitical tension.
“The oil price may be affected by the escalation … in the Red Sea over the weekend and the peak demand season during China’s Spring Festival,” said Leon Li,who is a Shanghai-based CMC Markets analyst .
A wider conflict could shut down critical waterways for oil transport, such as the Red Sea and the Straits of Hormuz in the Gulf. After the naval clash, an Iranian warship sailed into the Red Sea, Iranian media said on Monday.
Minimum four containers carrying diesel and fuel for jet from the Middle East region and India to Europe are sailing around Africa to keep away from the Red Sea, as per the ship tracking data.
Investors from China are expecting for fresh stimulus measures,r ose after manufacturing activity shrank for a third month in December, according to government data on Sunday.
This impetus could give an encouragement to economic growth, potentially raising oil demand and lend support to the same.