Global oil market on edge as Iran’s warship moves to Red Sea

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IRAN, Jan 2: Oil prices experienced a notable upswing on Tuesday as Iran dispatched a warship to the Red Sea, heightening concerns in the critical waterway where Yemen’s Houthi rebels have previously targeted vessels. The global crude benchmark Brent surged by 1.6%, reaching $78.27 a barrel, while US West Texas Intermediate rose by 1.42% to $72.67 per barrel during Asia trading hours.

Iran’s announcement on Monday revealed the deployment of the Alborz destroyer through the strategic Bab al-Mandeb Strait, a move aimed at securing shipping routes in the Red Sea. While details about the warship’s mission remain undisclosed, Iran’s state media emphasized the periodic nature of such operations in the region.

The escalation follows the U.S. Navy’s destruction of three boats belonging to Iran-backed Houthi rebels, resulting in the death of 10 militants. The Navy responded to a distress call from the Singapore-flagged vessel Maersk Hangzhou, which had come under Houthi fire, according to the US Central Command.

Bernstein’s Senior Energy Analyst Neil Beveridge acknowledged the potential for an increased risk premium on Brent due to the conflict but emphasized that a significant impact would only occur if the situation escalated further.

The Houthi group, which has targeted vessels in the Red Sea, cites official duties to secure maritime routes. The ongoing attacks have prompted major shipping companies to reroute via southern Africa, avoiding the Suez Canal and Red Sea routes. Despite this, the launch of Operation Prosperity Guardian by the U.S. has instilled confidence in shipping companies, leading Danish giant Maersk to announce the resumption of operations in the Red Sea and the Gulf of Aden.

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