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| Oil prices fell on announcement of Red Sea shipping, Saudi Arabia desperate to raise fuel prices | Photo: Reuters |
Earlier on Tuesday, the price of oil in the world market increased by more than 2 percent and reached the highest level of this month. Oil prices rose in the previous week as well and continued to rise yesterday. Oil prices rose more than 3 percent last week. This was partly because the US central bank, the Federal Reserve, was hoping to lower interest rates. According to the rules of economics, a reduction in policy interest rates will boost growth and increase demand.
Despite the decision of the world's major shipping companies to operate ships through the Red Sea, there are fears that Israel's military aggression in Gaza will be prolonged. Also, the threat of Houthi rebels' attacks in the Red Sea has not ended.
Yesterday, Israel's military chief Harji Halevi told reporters that Israel's war in Gaza could continue for many more days. Yemen's Iran-backed Houthi rebels, meanwhile, have claimed responsibility for a missile attack on a container ship in the Red Sea.
Despite the attack by Houthi rebels, major shipping companies such as Maersk and France's CMA CGM have announced that they will again operate ships in the Red Sea as the US-led multinational task force patrols the Red Sea. Germany's Hapag-Lloyd is expected to make a decision today.
Despite all this, the market is buzzing with news that the Federal Reserve will start cutting policy rates in 2024. Data from the Fed last Friday showed that the US inflation rate in terms of the personal consumption expenditure index fell below the central bank's target of 2 percent. According to the rules of economics, lowering the policy rate will lower the interest rate on commercial loans and stimulate the economy. Then the oil demand will also increase.
US crude oil inventories are estimated to have fallen by 2.6 million or 2.6 million barrels last week; However, gasoline stocks have increased slightly. This information was found in a preliminary survey by Reuters.
Stockpile data from the American Petroleum Institute and the Energy Information Administration are due out today and tomorrow, Thursday. The information was supposed to be released a day earlier but was delayed due to the Christmas holiday.