Tuesday saw an increase in oil prices as Houthi terrorists from Yemen, who are affiliated with Iran, attacked ships in the Red Sea, disrupting maritime traffic and forcing firms to reroute vessels.

At 05:30 GMT, Brent crude futures increased by 21 cents, or 0.27%, to $78.16 per barrel. Tuesday’s expiration of the front-month U.S. West Texas Intermediate crude futures contract saw a 3 cent increase to $72.50 a barrel. At $72.88, the more active second-month contract saw an increase of 6 cents, or 0.08%.

On Monday, both benchmarks saw a more than 1% increase due to worries that merchants may be rerouting their vessels away from the Red Sea.

“Despite price stabilization today, the potential risks caused by supply disruptions and the Middle East unrest could bring significant volatility to oil markets,” said Tina Teng, an analyst at CMC Markets in Auckland.

“Oil markets may face further upside pressure if geopolitical tensions get escalated,” she added

In an indication that the issue was spreading to include energy supplies, oil company BP temporarily halted all transits via the Red Sea, while oil tanker group Frontline announced on Monday that its vessels would not pass through the canal.

The Suez Canal, which links the Red Sea to the Mediterranean Sea and provides the quickest shipping route between Europe and Asia, is used by 15% of all international marine traffic.

Iran, the main adversary of the United States and Israel, has cautioned that creating a task force to guard Red Sea lines would be a mistake, but the attacks on ships have forced the country and its allies to debate the idea.

“Given that there has been a prompt collective response from several countries to mitigate attacks, it may not provide much conviction that disruptions may be long-lasting and that led to some reservations reflected in oil prices in today’s session,” said Jun Rong Yeap, a market strategist at IG in Singapore.

Iran’s Oil Minister Javad Owji said on Monday that a cyberattack was to blame for the countrywide outage of gas outlets.

Iranian state TV and Israeli local media stated that an attack disrupting services at petrol stations nationwide on Monday was carried out by a hacking group that Iran suspects of having ties to Israel.

While conceding that a significant portion of the traffic has already slipped Western monitoring as a result of Russia building a parallel fleet, U.S. officials stated on Monday that the country will press shippers to reveal more information about their interactions with Russia in order to execute sanctions.

(Adapted from Reuters.com)

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