Oil Prices Poised for Major Weekly Gain on Red Sea Tensions and Kazakh Supply Cut

Oil prices are heading for their largest weekly advance in months, driven by a pair of significant supply-side shocks that have heightened concerns over global energy security. Geopolitical tensions surged after attacks on oil tankers in a critical Red Sea shipping lane, while a major production outage in Kazakhstan further squeezed the market.

As of 0126 GMT, Brent crude futures traded at $99.97 a barrel, positioning the international benchmark for a 13.5% weekly gain, according to Reuters. West Texas Intermediate (WTI) futures stood at $91.49 a barrel, on track for a 10.9% rise for the week.

Red Sea Chokepoint Threatened

Market sentiment turned bullish after Iran-aligned Houthis claimed responsibility for striking two Saudi oil tankers in the Red Sea. The attacks sparked fears that the Bab el-Mandeb strait, a vital chokepoint for maritime trade connecting the Red Sea to the Indian Ocean, could be closed to traffic. This route is considered the second most important channel for oil shipments after the Strait of Hormuz.

The news sent prices soaring in the previous session, with Brent settling up 7% and WTI up 6.2%. "The noose around global energy supply routes is pulling tighter again," IG market analyst Tony Sycamore said in a note, capturing the market's apprehension. The attacks followed a Houthi declaration of a naval blockade on Saudi Arabia.

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Kazakhstan Production Curtailed

Adding to supply pressures, Kazakhstan’s energy ministry confirmed that oil companies had temporarily reduced production. The cuts were prompted by the closure of the country's primary Black Sea export terminal, which handles crude delivered via the Caspian Pipeline Consortium (CPC).

Industry sources cited by Reuters said the terminal suspended loadings following suspected Ukrainian drone attacks on tankers. The CPC route is a significant artery for global energy, responsible for transporting about 2% of the world's daily crude supply. While the ministry did not specify the exact volume of the production cuts, one source indicated that the nation's largest oil field had reduced its output by more than half.