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In an interview with American television station CNBC, Daan Struyven, head of Goldman Sachs' oil research division, expressed concerns about the impact of Houthi rebel disruptions on oil prices, as quoted on oilprice.com.
He emphasized that the Red Sea serves as a critical transit route for oil, and any prolonged disruption in this region could result in oil prices increasing by three to four dollars. However, if a disruption were to occur in the Strait of Hormuz and persisted for a month or longer, it could lead to a staggering 20% price increase, potentially even doubling oil prices.
International Concerns and Responses
Despite characterizing the likelihood of such disruptions as "highly unlikely," Struyven's comments resonate with a chorus of voices from the international business and political communities, all expressing apprehension about the situation.
Former Prime Minister and current Foreign Secretary David Cameron emphasized the global significance of the issue, stating that the attacks on commercial shipping by the Houthi rebels "have to stop." He highlighted that over ten countries had signed a letter to the Houthis, declaring these attacks illegal and warning of potential action if they continue.
Houthi Rebel Attacks in the Red Sea
Since November, Houthi rebels have launched more than 20 attacks on commercial shipping in the Red Sea, employing various methods such as missiles, drones, fast boats, and helicopters. In response, the United States initiated "Operation Prosperity Guardian" in December, aimed at increasing patrols in the Red Sea and Gulf of Aden to protect commercial traffic. Other countries, including the UK, Australia, and Canada, have also joined this effort.
Impact on Oil Prices and Shipping Companies' Response
While there were occasional minor spikes in oil prices in early to mid-December due to these actions, overall market volatility has remained relatively low. However, major shipping companies, including Maersk and Hapag Lloyd, two of Europe's largest shipping firms, have chosen to avoid the Red Sea and Suez Canal routes due to concerns over safety. Maersk had a vessel come under attack from rebels, further highlighting the risks involved.
Geopolitical Implications
What initially appeared as isolated disruptions to Western commercial activities is increasingly perceived by many as targeted actions in support of the Hamas cause. This comes as Israel escalates its attacks on Palestine, raising concerns about the geopolitical implications of these developments.
Oil ETFs in Focus
Against this backdrop, below we highlight a few oil ETFs that can be tapped on any bullish cues.
United States Oil Fund LP (USO - Free Report) – Up 0.6% Past Week
Invesco DB Oil Fund (DBO - Free Report) – Up 0.1% Past Week
United States 12 Month Oil Fund LP (USL - Free Report) – Up 0.1%
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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Oil Price to Double In Near Term? ETFs in Focus
In an interview with American television station CNBC, Daan Struyven, head of Goldman Sachs' oil research division, expressed concerns about the impact of Houthi rebel disruptions on oil prices, as quoted on oilprice.com.
He emphasized that the Red Sea serves as a critical transit route for oil, and any prolonged disruption in this region could result in oil prices increasing by three to four dollars. However, if a disruption were to occur in the Strait of Hormuz and persisted for a month or longer, it could lead to a staggering 20% price increase, potentially even doubling oil prices.
International Concerns and Responses
Despite characterizing the likelihood of such disruptions as "highly unlikely," Struyven's comments resonate with a chorus of voices from the international business and political communities, all expressing apprehension about the situation.
Former Prime Minister and current Foreign Secretary David Cameron emphasized the global significance of the issue, stating that the attacks on commercial shipping by the Houthi rebels "have to stop." He highlighted that over ten countries had signed a letter to the Houthis, declaring these attacks illegal and warning of potential action if they continue.
Houthi Rebel Attacks in the Red Sea
Since November, Houthi rebels have launched more than 20 attacks on commercial shipping in the Red Sea, employing various methods such as missiles, drones, fast boats, and helicopters. In response, the United States initiated "Operation Prosperity Guardian" in December, aimed at increasing patrols in the Red Sea and Gulf of Aden to protect commercial traffic. Other countries, including the UK, Australia, and Canada, have also joined this effort.
Impact on Oil Prices and Shipping Companies' Response
While there were occasional minor spikes in oil prices in early to mid-December due to these actions, overall market volatility has remained relatively low. However, major shipping companies, including Maersk and Hapag Lloyd, two of Europe's largest shipping firms, have chosen to avoid the Red Sea and Suez Canal routes due to concerns over safety. Maersk had a vessel come under attack from rebels, further highlighting the risks involved.
Geopolitical Implications
What initially appeared as isolated disruptions to Western commercial activities is increasingly perceived by many as targeted actions in support of the Hamas cause. This comes as Israel escalates its attacks on Palestine, raising concerns about the geopolitical implications of these developments.
Oil ETFs in Focus
Against this backdrop, below we highlight a few oil ETFs that can be tapped on any bullish cues.
United States Oil Fund LP (USO - Free Report) – Up 0.6% Past Week
Invesco DB Oil Fund (DBO - Free Report) – Up 0.1% Past Week
ProShares K-1 Free Crude Oil Strategy ETF (OILK - Free Report) – Up 0.1%
United States 12 Month Oil Fund LP (USL - Free Report) – Up 0.1%
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)