Oil Extends Weekly Gains, up 1% as Red Sea Tension Persists

Oil extends weekly gains, up 1% as Red Sea tension persists

By Robert Harvey

LONDON (Reuters) -Oil prices rose as much as 1% on Friday as tensions persisted in the Middle East following Houthi attacks on ships in the Red Sea, although Angola’s decision to leave OPEC raised questions over the group’s effectiveness in supporting prices.

Brent crude futures were up 92 cents, or 1.16%, to $80.31 a barrel by 0931 GMT ahead of Friday’s earlier 1230 GMT close ahead of the Christmas holiday weekend.

U.S. West Texas Intermediate crude futures were up 96 cents, or 1.3%, at $74.85 a barrel. At its intra-day peak WTI traded $1 higher than Thursday’s close.

Both Brent and WTI futures were on track for a near 5% week-on-week gain, buoyed by rising geopolitical risks due to the Red Sea attacks and potential disruptions to shipping operations.

More maritime carriers are avoiding the Red Sea due to attacks on vessels carried out by the Houthi militant group, who say they are responding to Israel’s war in Gaza. The attacks have caused global trade disruptions through the Suez Canal, which handles about 12% of worldwide trade.

The United States on Tuesday launched a multinational operation to safeguard commerce in the Red Sea, but the Houthis said they would continue to carry out attacks.

“The longevity of impact on prices is completely dependent on the length of time that shipping companies continue to steer clear of the area. What has exaggerated such impact is the lack of clarity on how, where and when the so-called naval coalition will turn up,” PVM analyst John Evans said.

Despite the geopolitical tensions supporting oil, prices recorded day-on-day declines on Thursday as Angola announced it would leave OPEC.

The African nation – which produces around 1.1 million barrels per day of oil – said its membership to the organisation was not serving its interests, having protested the decision by the wider OPEC+ group to reduce Angola’s output quota for 2024.

“This course of action has been rather predictable because of Angola’s attitude at the last OPEC meeting, nonetheless it brings into mind percolating divisions that might beset unity going forward,” PVM’s Evans added.

(Reporting by Robert Harvey in London and Emily Chow in Singapore; Editing by Miral Fahmy)