Oil prices experienced a notable uptick on Tuesday following Iran’s deployment of a warship to the Red Sea, amplifying concerns over stability in a vital global shipping route frequently targeted by Yemen’s Houthi rebels.
The global crude benchmark, Brent, escalated by 1.6%, reaching $78.27 per barrel, while U.S. West Texas Intermediate climbed 1.42% to $72.67 a barrel during Asian trading sessions.
Iran’s state media disclosed on Monday that the Alborz destroyer was dispatched through the strategic Bab al-Mandeb Strait, emphasizing periodic operations to safeguard maritime transit routes without specifying further objectives. This development ensued after the U.S. Navy neutralized three Iran-affiliated Houthi rebel boats, resulting in 10 casualties, subsequent to a distress signal from the Singapore-flagged Maersk Hangzhou vessel, as confirmed by the U.S. Central Command.
Neil Beveridge, Bernstein’s Senior Energy Analyst, commented on the evolving scenario, highlighting potential risk premiums associated with escalated conflicts in the region. Despite acknowledging the unprecedented nature of Iranian naval movements, Beveridge underscored minimal immediate impacts barring further escalation.
Amidst these developments, the Houthi rebels continue their maritime aggressions, targeting vessels en route to or from Israel, echoing retaliatory sentiments against ongoing conflicts in Gaza, which have claimed approximately 22,000 lives. The resultant disruptions prompted significant shipping conglomerates to reroute via southern Africa, despite heightened freight costs, reaching up to $10,000 per container.
Nevertheless, the inception of Operation Prosperity Guardian, a collaborative maritime initiative spearheaded by the U.S., instilled renewed confidence among shipping entities. Reflecting this sentiment, Danish shipping titan Maersk announced its decision to recommence operations in the Red Sea and Gulf of Aden, underscoring evolving dynamics in the critical maritime corridor.
