Oil up with Red Sea attacks, positive global economic outlook

Oil prices increased on Wednesday, supported by concerns that the conflict in the Middle East will disrupt global oil supply and data indicating positive global economic activity.

The international benchmark crude Brent traded at $82.53 per barrel at 9.58 a.m. local time (0658 GMT), a 0.23% rise from the closing price of $82.34 a barrel in the previous trading session on Tuesday.

The American benchmark, West Texas Intermediate (WTI), traded at the same time at $77.20 per barrel, up 0.21% from Tuesday’s close of $77.04 per barrel.

Tension is escalating in the Red Sea due to Houthi attacks on commercial ships suspected of having links with Israel and British forces. While the Houthis are threatening to retaliate against any attempt to send naval patrols to safeguard Israeli ships in the Red Sea, Western military forces are continuing attacks against Houthi targets within Yemen.

The Pentagon confirmed Tuesday that Houthi forces near Yemen downed a military MQ-9 Reaper drone on Monday.

‘We have been able to disrupt some delivery of capabilities to the Houthis. We’ve also continued to conduct coalition strikes and dynamic strikes in Houthi-controlled areas in Yemen,’ Sabrina Singh, the Pentagon’s deputy press secretary, told reporters.

Singh also said that as of Feb. 20, the US has taken 32 self-defense strikes against the Houthis, the most recent on Monday.

Yemen’s Houthi group claimed Tuesday to have attacked an Israeli ship in the Gulf of Aden and ‘sensitive’ sites in southern Israel.

– Investors await cues on US Fed future decisions

The minutes of the last meeting of the Fed’s Federal Open Market Committee (FOMC) will be published later on Wednesday. The minutes are expected to offer signals of the bank’s future steps for the coming period.

Analysts expect that the bank will start interest rate cuts in May or June.

Data revealing positive economic activity in Europe and Asia also aided in pushing oil prices higher. Analysts forecast that the European Central Bank and the Bank of England will start reducing interest rates in June.

The People’s Bank of China lowered its five-year loan prime interest rate, the benchmark rate for housing loans, above expectations in order to stimulate the real estate market. The move aims to revive the real estate sector while easing the burden on individuals and businesses.

According to the data announced early Wednesday in Japan, exports exceeded expectations with an annual increase of 11.9% in January.

• Fed's Federal Open Market Committee (FOMC).