Crude oil prices rise as tankers avoid Red Sea

HOUSTON — Oil rose 1% on Friday as an increasing number of oil tankers diverted course from the Red Sea following overnight air and sea strikes by the US and Britain on Houthi targets in Yemen after attacks on shipping by the Iran-backed group.

Brent crude futures settled 88 cents or 1.1% higher at $78.29 a barrel. The session high was up over $3 to more than $80, its highest this year.

US West Texas Intermediate (WTI) crude futures climbed 66 cents or 0.9% to $72.68, paring gains after touching a 2024 high of $75.25.

While the diversions were expected to push up the cost and time it take to transport oil, supplies have not yet been impacted, analysts and industry experts noted, easing some of the earlier gains in prices.

For the week, Brent was down 0.5% and WTI 1.1% lower. Earlier in the week,sharp price cuts by top exporter Saudi Arabia and a surprise build in US crude stockpiles spurred supply worries.

Tanker companies Stena Bulk, Hafnia, and Torm all said they had decided to halt all ships heading towards the Red Sea.

However, Suez Canal Authority head Osama Rabie said traffic is regular in both directions and there is no truth to reports navigation has been suspended due to developments in the Red Sea.

The US and UK strikes come in retaliation for Houthi attacks since October on commercial vessels in the Red Sea in a show of support for Palestinian militant group Hamas in its fight against Israel.

The escalation has fed worries the Israel-Hamas war could widen into a broader conflict in the Middle East, disrupting oil supplies. Iran seized a tanker on Thursday carrying Iraqi crude south of the strait destined for Turkey.

Houthi militants also mistakenly targeted a tanker carrying Russian oil in a missile attack on Friday off Yemen, British maritime security firm Ambrey said.

Diversion of tankers around South Africa will also push up freight rates as ships take longer routes. The Red Sea, a key route between Europe and Asia, accounts for about 15% of the world’s shipping traffic.

The US expects Houthis to attempt some sort of retaliation as US and Britain struck just under 30 different locations in Yemen, a senior US military official said.

Saudi Arabia called for restraint and “avoiding escalation” and said it was monitoring the situation with great concern.