Oil prices rose near their highest levels in more than two weeks as companies increasingly avoided the Red Sea due to a rise in attacks on ships along the major shipping channel.
The price of the most active February contract for West Texas Intermediate (WTI) crude rose 1.5% to settle near $74 a barrel after BP and Equinor said they would halt all shipments through the waterway.
The recent escalation in attacks by the Iranian-backed Houthi group in Yemen has fueled a rise in oil prices, after falling to their lowest levels in five months last week amid signs of rising production.
Despite the current rise in current prices, some traders do not expect it to continue in the long term, as time differences - an important measure of supply and demand - still indicate weakness.
The WTI spot spread, which is the difference between the January and February contracts, is trading at 50 cents in a bearish contango. Which indicates an abundance of oil in the near term.
This disruption is considered the most prominent of energy flows since the outbreak of the Israel-Hamas war, which prompted the United States to announce the launch of a new international maritime operation to protect commercial ships.
Analysts at Jefferies said in a note that about 8% of global crude passes through the Suez Canal, which puts pressure on the use of tankers if ships are forced to take the longer route around South Africa.
The price of West Texas Intermediate crude for January delivery, which expires on Tuesday, rose 1.3% to settle at $73.44 a barrel in New York. The most active February contract settled at $73.94
The price of Brent crude for February settlement rose 1.6% to settle at $79.23 a barrel.
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