Oil prices rose as much as 1 percent on Friday as tensions continued in the Middle East following Houthi attacks on ships in the Red Sea. Still, Angola’s decision to leave OPEC raised questions about the group’s effectiveness in supporting prices.
Brent crude futures were up 86 cents, or 1.1%, at $80.25 a barrel by 04:09 GMT, while West Texas Intermediate (WTI) crude futures were up 81 cents, or 1.1%, at $74.70 a barrel.
Both contracts rose more than 4% for the second week in a row, driven by concerns about the Red Sea concern driving up shipping prices.
A significant recovery in oil prices is expected due to geopolitical conflicts and OPEC’s production cuts. Therefore, a small supply deficit will likely occur in January next year and WTI crude oil may rise to $75-80 per barrel.
More shipping companies are avoiding the Red Sea due to ship attacks by the Yemeni Houthi militant group in support of the Palestinians, disrupting global trade through the Suez Canal, which handles about 12% of world trade.
Germany’s Hapag-Lloyd and Hong Kong’s OOCL are the latest companies to say they will avoid the Red Sea by rerouting ships or suspending sailings.
The United States launched a multinational operation to protect trade in the Red Sea on Tuesday, but the Houthis said they would continue attacks.
Analysts say the impact on oil supplies has been limited so far because most Middle East crude is exported through the Strait of Hormuz.
Saudi-led producer group OPEC has been rallying support in recent months to deepen production cuts and boost oil prices.
Saudi Arabia, Russia, and other members of OPEC+, which pump more than 40 percent of the world’s oil, agreed to voluntary production cuts of about 2.2 million barrels per day (bpd) for the first quarter of 2024.
Angola’s oil minister, protesting the OPEC+ group’s decision to reduce the country’s 2024 oil production quota, said on Thursday that the country’s membership of the Organization of Petroleum Exporting Countries does not serve its interests in achieving greater gains.
