The price of oil swung wildly as mounting tensions in the Red Sea were overshadowed by concerns about the global economy.
On the first day of trading of the new year, Brent crude rose more than 2.5 per cent to as high as $79.03 having ended 2023 at around $77.
The surge came after Iran sent a warship into the Red Sea following the sinking of three Houthi boats by US Navy helicopters over the weekend.
The developments fuelled fears the war between Israel and Hamas terrorists in Gaza could escalate into a full-blown regional conflict, pushing up the oil price and causing chaos to global trade.
But crude later gave up its gains, falling below $76 a barrel, as analysts said concerns about demand for oil amid a subdued outlook for the global economy were ‘keeping a lid’ on prices.
Crude move: On the first day of trading of the new year, Brent crude rose more than 2.5% to as high as $79.03 having ended 2023 at around $77
‘Oil markets got an initial lift-off after the attacks in the Red Sea but we had trouble sustaining those gains,’ said Tim Evans, an independent oil analyst.
Houthis, a Yemeni rebel militia backed by Iran, have been launching missile and drone attacks on cargo ships in the Red Sea since November in response to the war in Gaza.
This has caused major disruption to global trade with shipping companies sending vessels around the south of Africa rather than through the Red Sea and Suez Canal.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘Worries about the conflict becoming more complex have bubbled up again amid heightened tensions in the Red Sea.
This is increasing concerns about potential supply problems in the region, putting upwards pressure on crude.’
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