Brent lurks near $80 as Red Sea tensions spur jitters

LONDON: Global oil benchmark Brent hovered near $80 a barrel on Wednesday amid jitters over global trade disruption and geopolitical tensions in the Middle East following attacks on ships by Yemen's Iran-aligned Houthi forces in the Red Sea.

Brent crude futures were up 60 cents, or 0.8 percent, at $79.83 a barrel by 1552 GMT, while U.S. West Texas Intermediate crude climbed 67 cents, or 0.9 percent, to $74.61 a barrel.

The benchmarks rose by more than $1 earlier in the session as major maritime carriers chose to steer clear of the Red Sea route, with longer voyages increasing the cost of transport and insurance.

However, oil pared some gains after weekly data from the U.S. Energy Information Administration showed a surprise crude inventory build, larger than expected fuel stocks gains and record domestic oil production.

"The United States is becoming this swing producer to the globe," said Bob Yawger, director of energy futures at Mizuho. On Wednesday, Greece advised commercial vessels sailing in the Red Sea and the Gulf of Aden to avoid Yemeni waters. Greek ship owners control about 20 percent of the world's commercial vessels in terms of carrying capacity.

Meanwhile, Washington on Tuesday launched a task force to safeguard commerce in the region. However, sources including shipping and maritime security officials told Reuters that few practical details are known about the initiative or whether it will directly engage in the event of further armed attacks.

The Houthis vowed to defy the U.S.-led naval mission and to keep targeting Red Sea shipping in support of Palestinian enclave Gaza's ruling Hamas movement. About 12 percent of world shipping traffic passes up the Red Sea and through the Suez Canal. Although oil supply has been realigned, no shortages have yet emerged, analysts said. "As long as production is not threatened, the market will eventually adjust to changing supply routes," said Ole Hansen, an analyst at Saxo Bank.