Oil prices continue to rise in anticipation of tensions in the Red Sea.

Oil prices rose on Monday as traders anticipated a potential supply disruption in the Middle East. Brent crude futures increased by 13 cents, or 2.0 percent, to $78.42 per barrel after rising 1.1 percent at Friday’s close.

The West Texas Intermediate crude oil reached $73.72 per barrel, rising by five cents or 0.1%, following a previous session increase of nearly 1%.

The two benchmark crude oil prices rose by more than two percent last week, touching their highest levels this year during the session following airstrikes against Houthi forces in retaliation for months-long attacks on navigation in the Red Sea.

Warren Paterson, Head of Primary Commodity Research at I.N.G., said:

“There are supply risks in the market due to the escalation in the Red Sea… However, currently, we do not see any impact on oil supplies. I believe that would only happen if there is a significant escalation.”

Several ship owners steered clear of the Red Sea and several carriers changed their routes on Friday after the strikes, despite operators still monitoring Iran’s response and its impact on shipments in the Strait of Hormuz, the world’s most important oil passage.

Analysts at Goldman Sachs said in a note, “Since the conflict in the Middle East currently does not affect oil production, the priced geopolitical risk premium on oil appears to be modest now, based on inherent fluctuations in options.”

“Despite it being unlikely from our perspective, we estimate that oil prices will increase by 20 percent in the first month of navigation cessation in the Strait of Hormuz, and may temporarily double in the event of an extended continuation, which is a less likely possibility.”

In Libya, protesters threatened to shut down two other oil and gas facilities after closing the Sharara field, which produces 300,000 barrels per day, on January 7th.

In the United States, energy and natural gas companies are preparing for an extreme cold wave, which is expected to result in a record demand for gas while supplies are reduced due to freezing conditions experienced by wells.

(Reuters)