Oil prices rose on Monday as lower Russian crude exports and Houthi attacks on ships in the Red Sea stoked fears of supply disruptions.
Brent, the global benchmark for two thirds of the world's oil, was trading 0.89 per cent higher at $77.23 a barrel at 11.25am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.94 per cent at $72.10 a barrel.
Russia may increase oil production cuts in December by 50,000 barrels per day or higher, beyond its existing cut of 300,000 bpd, state news agency Tass quoted Deputy Prime Minister Alexander Novak as saying.
Meanwhile, four of the world's five biggest shipping companies have suspended their operations in the Red Sea after missile attacks by Yemeni Houthi rebels, risking disruption to trade.
The Bab Al Mandeb strait, situated at the southern edge of the Red Sea and the western part of the Gulf of Aden, is 32km wide.
The maritime passage serves as a vital route for oil tankers and vessels traveling between the Arabian Gulf and Asia, as well to Europe by way of the Suez Canal.
About 12 per cent of the seaborne oil trade and 8 per cent of liquefied natural gas pass through the strait.
Oil prices recorded a small gain last week after the US Federal Reserve left interest rates unchanged at the year’s last policy meeting and hinted at rate cuts in 2024.
“The successful alleviation of inflation can be attributed to the decline in oil prices,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“Even though the base-case scenario is a limited upside potential in oil prices, any reversal in oil price dynamics could tame the Fed cut expectations.”
Last week, Opec stuck to its oil demand growth forecast for 2023 and 2024 and said it expected “resilient” gross domestic product growth globally to support crude demand next year.
The group raised its forecast for world economic growth to 2.9 per cent for 2023, but left its growth estimate for the coming year unchanged at 2.6 per cent.
“Continuous improvements in economic activity, steady manufacturing and transportation activity mostly in China, other Asia and the Middle East, as well as in India and Latin America, are expected to account for the bulk of oil consumption,” Opec said.
The International Energy Agency expects world oil demand to rise by 1.1 million bpd next year, which is about half of the agency's 2023 growth estimate of 2.3 million bpd.
