Wednesday saw an almost 2% decline in oil prices, offsetting the gains of the previous day as investors kept an eye on events in the Red Sea, where merchants are returning after further attacks on Tuesday.

At $79.65 a barrel, Brent oil futures ended the day down $1.42, or 1.8%. U.S. At $74.11, West Texas Intermediate crude dropped $1.46, or 1.9%.

(Photo : by -/AFP via Getty Images)
Wednesday saw an almost 2% decline in oil prices, offsetting the gains of the previous day as investors kept an eye on events in the Red Sea, where merchants are returning after further attacks on Tuesday.

After declaring a temporary stop to those routes this month due to strikes by Yemen's Houthi militia, which is supported by Iran, Danish shipping major Maersk said it has planned several dozen container ships to go via the Red Sea and Suez Canal in the upcoming weeks.

France's CMA CGM has announced the resumption of navigation through the Red Sea following the deployment of a multinational task force in the region.

Callum Macpherson, the head of commodities at Investec, emphasized the need to observe whether the heightened naval patrols and rerouting of ships result in a reduction in attacks.

Both the Brent and WTI benchmarks settled more than 2% higher in the previous session as the latest attacks on ships in the Red Sea prompted fears of shipping disruption.

The prospect of a prolonged Israeli military campaign in Gaza remained a major driver of market sentiment.

Israeli forces pummelled central Gaza by land, sea and air on Wednesday, a day after Israel's Chief of Staff Herzi Halevi told reporters the war would go on "for many months".

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A.P. Moller-Maersk's Response to U.S. Operation Prosperity Guardian

The previous week, the U.S. Operation Prosperity Guardian is a multinational marine task force that Defense Secretary Lloyd Austin announced to safeguard Red Sea commercial channels. The Houthis' activities were described by Austin as "an international challenge that demands collective action.

All weekend long, A.P. Moller-Maersk Second-largest container line in the world announced that it was getting ready to resume operations in the Red Sea and Gulf of Aden that had been halted due to the security endeavor spearheaded by the United States. The business declared that Operation Prosperity Guardian "is most welcome news for the functionality of global trade as well as the entire industry."

Wednesday's 2% decline in oil prices, driven by events in the Red Sea, showcased the delicate balance of global oil markets. The resumption of shipping routes through the Red Sea by major players like Maersk and CMA CGM, following recent attacks and geopolitical tensions, added an element of uncertainty.

Investors remained on edge, closely monitoring naval patrols and potential reductions in attacks. The backdrop of heightened geopolitical risks, including the Israeli military campaign in Gaza and the ongoing challenges posed by Houthi activities, continued to influence market sentiment. The interplay of security measures and economic considerations underscored the intricate nature of global trade dynamics. 

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