Attacks in the Red Sea region cause an increase in the price of crude oil

The growing attacks in the Red Sea, which have forced oil corporations and tanker owners to steer clear of the area, caused crude oil prices to spike by 2.11%, closing at 6,137. According to Russian Deputy Prime Minister Alexander Novak, the country is considering reducing its oil exports by more than 50,000 barrels per day (bpd) in December in an effort to raise world oil prices. This news provided assistance to the market. The already decided-upon annual reduction of 300,000 bpd would be supplemented by these further decreases.

An additional factor in the price increase was the unfavorable weather in Russia, which prevented around two thirds of port loadings. The Houthi attacks on ships near Yemen stoked worries about possible delays in the oil supply, and geopolitical tensions contributed to the optimistic mood. As Houthi rebels in the Red Sea intensify their attacks on commercial vessels, shipping companies are thinking of circumventing the Suez Canal.

Crude oil prices were further boosted by the optimistic projection by the International Energy Agency (IEA) of 1.1 million bpd growth in oil consumption in 2024. Furthermore, statistics from Baker Hughes Rig Counts on Friday indicated a drop to 501 from the previous count of 503, indicating a marginal decline in the consumption of goods and services generated by the oil and gas sector.

With open interest rising 5.87% to close at 13,402, the market appears to be under new purchasing pressure technically. A breach below 5,940 might take crude oil below 5,744. At the moment, 5,940 is providing support for the price. 6,277 is probably the resistance level, and a rise above there might result in testing at 6,418.

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