Oil prices surged on Tuesday as Iran deployed a warship to the Red Sea amidst ongoing tensions in this crucial global shipping route, where Yemen’s Houthi rebels have targeted vessels. The global crude benchmark Brent rose by 1.6% to $78.27 a barrel, and U.S. West Texas Intermediate increased by 1.42% to $72.67 per barrel during Asian trading hours.
Iran’s Alborz destroyer passage through the Bab al-Mandeb Strait heightened concerns. Although Iran provided no details on the warship’s mission, it emphasized periodic operations in the Red Sea to secure shipping routes. Meanwhile, the U.S. Navy’s destruction of three Iran-backed Houthi rebel boats in response to an attack on the Maersk Hangzhou added to the regional tensions.
The maritime tension led major shipping companies to avoid the Suez Canal and Red Sea routes in December, opting for longer, costlier journeys via southern Africa. Ocean freight rates soared to $10,000 per container.
Despite this, the U.S.-led Operation Prosperity Guardian has boosted confidence, prompting Danish shipping giant Maersk to announce the resumption of operations in the Red Sea and the Gulf of Aden.
Source: CNBC