Oil prices rise due to attacks on Red Sea shipping: “wave of unrest” in energy chain | Economy

The price of a barrel of Brent, the most common oil in Europe, rose 3 percent last week, the biggest increase in a week since October. The price for a barrel of the type remains above 80 dollars (72.50 euros). The American grade West Texas Intermediate (WTI) rose to 75 dollars (68 euros) per barrel.

Houthi rebels from Yemen are increasingly targeting large tankers and container ships sailing across the Red Sea. The rebels support the Palestinian terrorist movement Hamas in the war with Israel and bombard the ships with rockets. Just on Tuesday, the British Navy reported an explosion and missile attacks 4 nautical miles (7.4 kilometers) from a ship off the coast of Yemen, hours after another ship reported explosions. American attacks on pro-Iranian troops in Iraq on Christmas Day also raise fears of an additional escalation of tensions in the Middle East.

It is also turbulent in the Arabian Sea, just east of the Red Sea. After the drone attack on a merchant ship off the Indian west coast, India has announced that it wants to send three warships to the Arabian Sea.

Meanwhile, the United States has set up an alliance with at least twenty other countries to protect cargo traffic in the Red Sea. The operation under the name ‘Prosperity Guardian’ is intended to prevent the ships from being attacked by the rebels any longer.

Several shipping companies have announced in recent weeks that they will no longer sail through the Red Sea. The longer circumnavigation via Africa leads to higher costs and delays of up to ten days, including for oil deliveries. “Energy supply chains face another wave of unrest” as attacks on the Red Sea cause domino effects, according to analysts at S&P Global Market Intelligence. “And alternative routes (via Africa, ed.) have been compromised on a practical and economic level.”

The recent increases in oil prices are partly dampening the quarterly losses. This year, prices are still expected to be 8 percent lower than last year. Traders are concerned that crude supply will exceed demand next year, despite promises from the Organization of the Petroleum Producing Countries (OPEC) to further cut production.