WTI advances to near $72.80 on the US-Houthi clash, Iranian warship sails to the Red Sea

West Texas Intermediate (WTI) price trades higher around $72.80 per barrel during the Asian session on Tuesday. The surge in crude oil prices is linked to a naval clash in the Red Sea. Houthi militants attacked a Maersk container ship on Sunday, but the assault was thwarted by US helicopters.

Following the incident, the possibility of disruptions in Middle East supply grows, with reports of an Iranian warship entering the Red Sea. Additionally, Iran-led groups launched attacks on US forces and Israel in Gaza, raising concerns about a broader conflict that could potentially close vital waterways for oil transportation, including the Red Sea and the Straits of Hormuz in the Gulf.

The downward pressure on Crude oil prices stems from concerns over slowing global economic growth and the escalating worry about increased supply, especially from producers outside the Organization of the Petroleum Exporting Countries and its allies (OPEC+). The oil group is grappling with weakening export demand in 2024, coinciding with a decline in its global market share to its lowest level due to output cuts and Angola's departure from the group. This raises doubts in the market about OPEC+ being able to adhere to the planned supply cuts of around 6 million barrels per day.

Furthermore, Basim Mohammed, deputy oil minister for upstream affairs in Iraq, informed Reuters that US ExxonMobil Corp has officially withdrawn from the West Qurna 1 oilfield in southern Iraq and has transferred its operations to PetroChina, the lead contractor. Iraq and PetroChina have ambitious plans to increase production to 600,000 barrels per day by the end of 2024.