Yesterday, oil prices surged by 1% following Iran’s seizure of an oil tanker near Oman’s coast, intensifying concerns over heightened Middle East tensions. Brent futures climbed 61 cents to $77.41 a barrel, and U.S. West Texas Intermediate (WTI) crude rose by 65 cents, settling at $72.02, indicating potential geopolitical risks.
Anticipating a future surge in oil prices, I examined two energy stocks, Exxon Mobil Corporation (XOM – Get Rating) and Valero Energy Corporation (VLO – Get Rating), to ascertain which holds greater potential for superior gains in 2024. Prior to evaluating these stocks, let’s delve into the factors influencing oil prices.
In the Middle East, Iran retaliated by seizing a tanker carrying Iraqi crude bound for Turkey in response to last year’s U.S. confiscation of the same vessel and its oil. The seizure of the Marshall Islands-flagged St. Nikolas aligns with ongoing attacks by Yemen’s Iran-backed Houthi militias, focusing on Red Sea shipping routes.
This week, Yemen’s Houthi rebels executed their most extensive assault on commercial shipping routes in the Red Sea. In a pivotal naval confrontation, the British and U.S. navies intercepted a substantial barrage of drones and missiles, effectively securing the safety of the Red Sea shipping routes.
The Iranian-backed Houthis launched an attack despite the imminent United Nations Security Council vote, aiming to condemn and demand an immediate cessation of their assaults. The rebels assert that their actions target Israel’s offensive against Hamas in the Gaza Strip.
Oil prices surged in response as the United States warned Houthi militants against further Red Sea attacks, and OPEC pledged to maintain unity in supporting prices. Simultaneously, protests in Libya prompted the closure of the Sharara oil field, which is responsible for a daily output of 300,000 barrels.
The U.S. Energy Information Administration (EIA) reports that mounting tensions in the pivotal Red Sea shipping channel and other Middle East developments have been applying upward pressure on prices since early December.
Should these tensions endure or escalate, there exists the possibility of…
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