Oil prices stabilized on Wednesday, with investors keeping a close eye on developments in the Red Sea region and eagerly awaiting the release of inventory data from the American Petroleum Institute (API) and the Energy Information Administration (EIA).
Tensions in the Middle East have been a cause for concern among investors, leading to fluctuations in oil prices. Despite this, major shipping companies are gradually resuming routes through the Red Sea, alleviating some of the concerns about shipping disruptions in the region.
As of press time, Brent crude oil futures fell by US$0.51, or 0.60%, to US$80.38 per barrel, while U.S. West Texas Intermediate crude oil fell by US$0.36, or 0.48%, to US$75.08 per barrel.
The previous session saw benchmark oil prices rise more than 2%, primarily due to attacks on ships in the Red Sea. These attacks raised concerns about shipping disruptions, contributing to the increase in oil prices. Additionally, expectations that the Federal Reserve may cut interest rates, which would boost economic growth and fuel demand, have also supported oil prices.
Major shipping companies such as Maersk and CMA CGM are resuming routes through the Red Sea, which is expected to have a positive impact on regional trade and transportation. Russian Deputy Prime Minister Novak also announced that almost all of Russia’s oil exports this year will be shipped to Asia, highlighting the shifting dynamics of the global oil market.
In response to Western economic sanctions, Russia has quickly adjusted its oil supply direction, diverting exports from Europe to other regions. At present, Russia’s crude oil exports to Asia account for about 90% of its total exports. Novak emphasized that Russia will fulfill its production reduction obligations as part of the OPEC+ group of major oil-producing countries, and he predicts that Brent crude oil prices will reach $80-85 per barrel next year.
The impact of the closures of shipping lanes and changes in ship routes on global supply remains a topic of debate, and the prospect of the Palestinian-Israeli conflict in the Gaza Strip is also a significant factor affecting market sentiment.
In terms of recent disruptions, the Russian Black Sea port of Novorossiysk suspended oil loading work due to a storm on Wednesday, while Kazakhstan’s Energy Ministry announced that crude oil exports from the Caspian Pipeline Consortium (CPC) terminal have resumed.
Investors are eagerly awaiting the release of inventory reports from the API and EIA, which have been delayed by a day due to the Christmas holiday. These reports are expected to provide further insights into the state of the oil market and may influence future price movements.