Oil set for weekly rise amid Red Sea shipping attacks

BEIJING: Oil headed for weekly gains on Friday, as Houthi attacks on tankers in the Red Sea sparked worries about the closure of a second shipping chokepoint, while Kazakhstan temporarily cut output after its main export route ‌was forced to shut.

Brent futures eased 72 cents, or 0.72%, to $99.97 a barrel as of 0126 GMT, but remained on course for a 13.5% advance this week. West Texas Intermediate (WTI) futures fell 70 cents, or 0.76%, to $91.49 a barrel, on track for a 10.9% weekly rise.

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Brent had settled up 7% and WTI up 6.2% on Thursday, the first ⁠time since May that Brent settled above $100 after Iran-aligned Houthis said they had struck two Saudi oil tankers in the Red Sea.

Prices were driven up by fears that the attacks would lead to the closure of the Bab el-Mandeb shipping route, which controls access from the Red Sea to the Indian Ocean and is the second most important oil channel after the Strait of Hormuz.

U.S. President Donald Trump vowed to “hold Iran responsible” for any further attacks.

The Iran-aligned Houthis had declared on Monday that they were imposing a naval blockade on Saudi Arabia, which had been diverting ‌its ⁠oil via pipeline to get around Iran’s closure of the Strait of Hormuz.

Iran had been pressing the Houthis to close the Bab el-Mandeb gateway to the Red Sea if the U.S. continued to attack Iranian power infrastructure, after an interim truce between the two countries collapsed two weeks ago.

“The noose around global ⁠energy supply routes is pulling tighter again,” IG market analyst Tony Sycamore said in a note.

Also on Thursday, Kazakhstan’s energy ministry said oil companies temporarily cut back production after suspected Ukrainian drone attacks forced the country’s ⁠main Black Sea export terminal to close.

The Caspian Pipeline Consortium stopped receiving oil from Kazakhstan after suspending loadings because of attacks on tankers at the terminal, industry sources had said on ⁠Tuesday. The route handles about 2% of global daily crude supply.

Kazakhstan’s energy ministry did not specify the scale of the production reductions, but one source said the country’s biggest field had cut output by more than half.