Oil prices slip as the US creates a Red Sea task force

Tuesday saw a decrease in oil prices following the announcement by the US government of forming a task force to protect Red Sea trade from assaults by militants in Yemen who are supported by Iran. These attacks have caused disruptions to maritime traffic and forced corporations to reroute boats.

Crude increased by about 2% on Monday following an attack on a Norwegian-owned ship and BP's announcement that it has stopped all Red Sea transit, sparking fears of a disruption in supplies. Approximately 12% of global maritime traffic is via the Suez Canal.

According to John Evans of oil broker PVM, "the actual effect on oil flows is likely to be limited" despite the fact that the assaults on tankers have increased the geopolitical risk premium.

"The attacks have not hit anything that would interfere with production," he stated.

Among the countries taking part in the operation are the UK, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles, and Spain.

Analysts at Goldman Sachs said that the disturbance would not likely have a significant impact on the price of petroleum and LNG since there are options to redirect boats, which suggests that output shouldn't be directly impacted.

Amid indications that the crisis was spreading to encompass energy supplies, oil company BP has temporarily stopped transit via the Red Sea, while oil tanker operator Frontline announced on Monday that its tankers will avoid the route.

This week's attention will also be on the most recent estimate of US supply. It is anticipated that US crude stockpiles will drop by 2.2 million barrels.

(Sources: investing.com, reuters.com)