Oil Prices Fall After Israel Concludes Gaza Strikes
Israel’s Statement Eases Concerns About Middle East Supply
Oil prices dropped in early Asian trade on Monday after Israel announced the conclusion of a series of strikes in southern Gaza. This development slightly eased concerns about supply from the Middle East. Futures for oil were 29 cents, or 0.4% lower, at $81.90 a barrel, while U.S. West Texas Intermediate crude futures were down 28 cents, or 0.4%, at $76.56 a barrel at 0746 GMT. The decrease comes after a 6% increase in prices last week due to geopolitical risks, including the Israel-Palestinian conflict and potential oil supply disruptions in the region.
Logistics Disruptions in the Red Sea
Israel’s military reported conducting a “series of strikes” on southern Gaza, which have now “concluded,” following the rejection of a ceasefire proposal from Hamas by Israeli Prime Minister Benjamin Netanyahu. Concerns about logistics disruptions in the Red Sea continue to trouble investors, especially after the United Kingdom Maritime Trade Operations (UKMTO) agency received a report of a ship being attacked by two missiles south of Yemen’s Al Mukha. This incident adds to the ongoing tension in the region, as Iran-aligned Houthi militants in Yemen have been targeting commercial ships since mid-November as a response to Israel’s military actions in Gaza.
Supply Concerns and U.S. Output
While supply concerns in the Middle East remain heightened, news from the U.S. has somewhat eased worries. U.S. energy firms increased oil and rigs to their highest since mid-December, potentially signaling an increase in output. Domestic production returned last week to a record 13.3 million barrels per day (bpd). However, demand concerns persist, as a Federal Reserve official expressed no interest in recommending an interest rate cut, which could slow economic growth and curb oil demand.
Trading in Asia
Trading in Asia hours has been thin as most of the region, including China, Hong Kong, Japan, South Korea, Singapore, Taiwan, Vietnam, and Malaysia, are closed for holidays. Mainland China’s financial markets are closed for the Lunar New Year holiday and will resume trade on Monday, Feb 19. Hong Kong trade will resume on Feb. 14.