Oil jumps around 2.5pc in New Year after US forces repel Houthis in Red Sea

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Oil jumps around 2.5pc in New Year after US forces repel Houthis in Red Sea

During the trading day on Tuesday, oil prices went up by 2%. This was the first rise of the New Year. A navy battle in the Red Sea brought attention to possible supply problems in the Middle East, and hopes for economic growth in China, the world’s biggest crude importer, made people more optimistic about demand.

At 10:26 GMT (3:26pm PST), Brent oil had gone up $1.92, or 2.49pc, to $78.96 a barrel. US West Texas Intermediate (WTI) crude had gone up $1.74, or 2.43pc, to $73.39 a barrel.

It became more likely over the weekend that the conflict between Israel and Gaza would spread to other parts of the region after Houthi militants backed by Iran attacked a Maersk container ship in the Red Sea and were thwarted by US helicopters. Three of the militants were sunk.

American, Maersk, and Houthi officials all say that the attack happened and 10 terrorists were killed.

Iran also backs Hamas, the group that runs Gaza and is fighting Israel. Other groups in Iran’s home region of the Middle East have also attacked US troops and Israel. The Red Sea and the Straits of Hormuz in the Gulf could become impassable if the war gets worse. These are important waterways for transporting oil.

“The oil price may be affected by the worsening of the situation in the Red Sea over the weekend and the high demand during China’s Spring Festival,” Leon Li, a CMC Markets expert in Shanghai, said. He was referring to the Chinese New Year holiday, which starts in early February.

He also said that the expected Christmas demand is making people think that prices will go back up in January.
Iran’s media said on Monday that a warship had moved into the Red Sea after the naval battle.

Tracking information for at least four tankers send diesel and jet fuel from the Middle East and India to Europe. To avoid the Red Sea, they are taking the longer path around Africa.

THE CHINA STIMULUS

After factory activity fell for a third month in December, investors became more hopeful that China would take more steps to boost the economy. But a study on Tuesday from the private sector showed that it grew last month, even though factory owners are less optimistic about 2024 than they were in November.

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