Oil Prices Rebound Amidst Concerns Over Energy Demand and Attacks on Tanker Ships

Oil prices saw a reverse in losses and began to rise early on Tuesday, as the market grappled with concerns surrounding weakening energy demand and the ongoing attacks on tanker ships in the Red Sea.

U.S. Benchmark and International Standard Show Gains

West Texas Intermediate, the U.S. benchmark, experienced a 0.9% increase, reaching $73.32 per barrel after initially falling. Similarly, Brent crude, the international standard, saw a 1.2% rise, bringing it to $79.12 per barrel. While both contracts have seen an increase of over 2% since the beginning of the year, they still remain approximately 15% lower than they were three months ago.

Fresh Attacks Raise Concerns as Central Bankers Discuss Interest Rates

On Monday, fresh attacks on Western targets off the coast of Yemen prompted the Iran-backed Houthi rebels to declare their intention to broaden the range of targets, according to The Wall Street Journal. Simultaneously, comments from central bankers suggesting a potential continuation of higher interest rates impacted expectations for global economic strength in the coming months.

Mixed Factors Create Uncertainty in Oil Market

Kelvin Wong, a strategist at Oanda, noted that while the conflict in the Middle East may have established a price floor, concerns regarding demand may restrict any substantial price increases. Wong stated in a note on Tuesday, "There are no clear catalysts to determine whether the bulls or bears are leading the oil market as conflicting factors are at play, thus causing a flux situation."

Shell Agrees to Sell Nigeria Onshore Unit, Share Prices Struggle

In a separate development, European oil major Shell reached an agreement to sell its Nigeria onshore unit for approximately $2.4 billion to a consortium of companies. This sale comes after several years of effort by Shell to divest from the business. However, the sale did not significantly impact the company's share price, as Shell's American depositary receipts fell by 1.8% in premarket trading. Rival company BP also experienced a decline of 1.3%. On the other hand, Exxon Mobil saw a 0.2% increase, while Chevron observed a 0.4% rise.