Oil reaches new December peak

Key economic events impacting oil this week

This week, oil prices have experienced a notable surge, primarily driven by escalating concerns over supply disruptions emanating from the Middle East. These concerns have intensified due to increasing geopolitical tensions in the region. The recent attacks on vessels navigating the Red Sea have amplified the perceived risks, leading to significant disruptions in maritime trade. Consequently, numerous companies are now rerouting their shipping paths. This development poses potential challenges for container shipping through crucial passages such as the Bab el Mandeb Strait and the Suez Canal.

In a recent development, BP, a major British energy corporation, announced a temporary halt of its shipments in the Red Sea, citing heightened security concerns. Similarly, Taiwan's Evergreen Line has decided to divert its vessels to safer waters in the vicinity. Furthermore, Frontline, a prominent oil tanker group, has also indicated its avoidance of the troubled waterway, signifying the crisis’s impact on energy shipments. It is important to note that the Suez Canal is a critical global shipping artery, accommodating approximately 15% of worldwide shipping traffic and offering the most direct route between Europe and Asia.

In a separate but related development, Alexander Novak, a key figure in Moscow's energy sector, announced that Russia plans to further reduce its oil exports by an additional 50,000 barrels per day in December. This comes on top of the existing decision to cut supply by about 300,000 barrels per day.

From a trading perspective, oil prices saw an increase of over 2% on Tuesday. However, they began the third session of the week with a modest decline, hovering around $74.05 per barrel.

Pivotal technical levels influencing oil

Oil prices have recently breached the $73.50 resistance level. Should prices sustain above this threshold, it may fuel a continued upward trajectory towards the $76.40 mark. A breakthrough beyond this point could propel prices to challenge the $79.50 level. Conversely, if oil prices retract from their current standings, support may be found near the $72.00 level. Holding above this mark is crucial to affirm a positive outlook. However, a downward breach could see prices testing the $68.00 support level.