Oil prices slipped on Monday with traders watching out for supply disruption risk in the Middle East following strikes by U.S. and British forces to stop Houthi militia in Yemen from attacking ships in the Red Sea.
Brent crude futures fell 31 cents, or 0.4%, to $77.98 a barrel by 0124 GMT after settling up 1.1% on Friday. U.S. West Texas Intermediate crude was at $72.36 a barrel, down 32 cents, or 0.4%, following a near 1% gain in the previous session.
On Sunday, the Houthi militia threatened a “strong and effective response” after the United States carried out another strike overnight, ratcheting up tension. The U.S. later said it shot down a missile fired at one of its ships from Houthi militant areas of Yemen.
President Joe Biden said the United States had sent a private message to Iran about the Houthi attacks.
Several tanker owners steered clear of the Red Sea and multiple tankers changed course on Friday following the strikes, although traders were still watching out for Iran’s response and impact on shipments in the Strait of Hormuz, the world’s most important oil chokepoint.
“As the Middle East conflict is currently not affecting oil production, the geopolitical risk premium priced in oil prices now appears modest based on the implied volatility of options,” Goldman Sachs analysts said in a note.
In Libya, people protesting against perceived corruption threatened to shut down two more oil and gas facilities after shutting the 300,000 barrel-per-day Sharara field on Jan. 7.
In the U.S., power and natural gas companies were preparing on Friday for extreme cold over the Martin Luther King Day holiday weekend that is expected to cause record gas demand while also cutting supplies by freezing wells.
