Oil steadies as Red Sea risks weigh against record US output

Oil was stable after three days of gains as traders weigh surging US production against the ongoing threats of Houthi attacks on ships in one of the world’s most important waterways.

Global benchmark Brent futures pared a decline of as much as 0.9% to trade near $80 a barrel, while West Texas Intermediate was near $74. Government data on Wednesday showed US crude output hit a new record high of 13.3 million barrels a day last week. Meanwhile, the Iran-backed militant group warned it would retaliate if the US carries out attacks on its bases in Yemen

Crude has rallied this week as the escalation of the Red Sea attacks prompted shippers to divert vessels away from the major energy chokepoint. It is still set for its first annual decline since 2020, with investors unconvinced that OPEC+ will be able to tighten the market next quarter despite the group’s decision to prolong their supply curbs. That comes as production increases from nations outside the cartel, including the US, Guyana and Brazil.

“It’s a market with a lot of tensions and in particular, supply tensions,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. “You have the Rea Sea but you also have record US production and signs of OPEC losing grip on quota discipline.”

Source: Moneyweb