Oil Edges Lower on China Worries as Middle East Tensions Fester
01.29.2024 By Tank Terminals - NEWS

January 29, 2024 [Reuters]- Oil prices dipped on Monday as China’s ailing property sector took another hit while a drone attack on U.S. forces in Jordan added to supply disruption concerns in the Middle East and Houthi militants stepped up attacks on vessels in the Red Sea.

 

Brent crude futures dipped 23 cents to $83.32 a barrel by 0937 GMT while U.S. West Texas Intermediate crude futures edged down by 27 cents to $77.74.

A Hong Kong court on Monday ordered the liquidation of property giant China Evergrande Group (3333.HK), opens new tab in a sign of a deepening crisis in China’s real estate sector, knocking sentiment on crude demand in the world’s largest oil importer.

Meanwhile, risks of widening conflict in the Middle East are growing. Last weekend’s drone strike by Iran-backed militants on U.S. troops in Jordon.

Commodities trader Trafigura said it was assessing the security risks of further Red Sea voyages after firefighters put out a blaze on a tanker attacked by Yemen’s Houthi group a day earlier.

“We believe the death of three U.S. service members today in Jordan marks a critical inflection point in the ongoing conflict in the Middle East,” RBC Capital analyst Helima Croft said, adding that a more direct confrontation with Iran heightened the risk of regional energy supply disruptions.

“Disruptions to supply have been limited, but that changed on Friday after an oil tanker operating on behalf of Trafigura was hit by a missile off the coast of Yemen,” ANZ analysts said in a note.

Meanwhile, Russia is likely to cut exports of naphtha, a petrochemical feedstock, by between 127,500 and 136,000 barrels per day – about a third of its total exports – after fires disrupted operations at Baltic and Black Sea refineries, according to traders and LSEG ship-tracking data.

 

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