Oil prices rise as BP suspends operations in Red Sea amid attacks

by Miranda Nazzaro - 12/18/23 12:47 PM ET

(Petty Officer 3rd Class Bill Dodge/U.S. Navy via AP)
The guided-missile destroyer USS Carney in Souda Bay, Greece. The American warship and multiple commercial ships came under attack Sunday, Dec. 3, 2023 in the Red Sea, the Pentagon said, potentially marking a major escalation in a series of maritime attacks in the Mideast linked to the Israel-Hamas war. “We’re aware of reports regarding attacks on the USS Carney and commercial vessels in the Red Sea and will provide information as it becomes available,” the Pentagon said. (Petty Officer 3rd Class Bill Dodge/U.S. Navy via AP)

Oil prices rose by more than 2 percent Monday as various companies, including BP, suspended shipping operations in the Red Sea amid attacks by Yemen’s Houthi rebels on multiple vessels.

The price of Brent Crude Oil, a European benchmark used for global market purchases, rose to $78.50 a barrel, an estimated 2.5 percent increase over Sunday, according to MarketWatch.

The jump comes just hours after London-based BP announced Monday it would temporarily pause all transits through the Red Sea “in light of the deteriorating security situation for shipping” along the major trade route.

Houthi rebels in recent weeks have upped their attacks against Israeli-linked vessels in the Red Sea with hopes of curbing Israeli airstrikes and ground attacks in Gaza amid Israel’s war with Hamas.

It appears their most recent attacks last week began to hit vessels with no clear ties to Israel, however, prompting concerns from major shipping companies that use the Red Sea as a vital corridor for cargo and energy shipments.

Earlier Monday, the Houthis claimed they attacked two commercial ships — the MSC Clara and Norwegian-owned Swan Atlantic — with naval drones after the ships’ crews did not respond to calls, Reuters reported.

Norway-based oil tanker group Frontline confirmed to Reuters it would start avoiding routes through the Red Sea and the Gulf of Aden. The Swan Atlantic’s owner confirmed the ship was struck by an unknown object, though none of the crew was hit, the news wire added.

This followed two attacks within hours of each other Friday in which the Houthis claimed to hit the Al Jasrah, which was being operated by German shipping company Hapag-Lloyd, and the MSC Palatium III, a Liberian-flagged container ship that later caught on fire.

Hapag-Lloyd announced last week it would pause all traffic in the corridor until Monday in the wake of the attacks. Other major container shipping companies, including A.P. Moller-Maersk, MSC and the CMA CGM Group, said last week they also suspended operations in the Red Sea.

Meanwhile, experts last week told The Hill they were expecting a decline in gas prices ahead of the holidays. Experts said the decline, which was observed shortly after the Nov. 30 meeting of the OPEC+ oil cartel, indicates OPEC+ is struggling to balance oil supply and demand in the wake of increasing supply from the U.S., Brazil and Guyana along with an unexpected lower demand from China.