• Oil advanced after Iran sent a warship to the Red Sea in response to the destruction of three Houthi boats by the US Navy over the weekend.
• West Texas Intermediate traded near $72 a barrel after declining by 5.2% over the prior three sessions, while Brent closed around $77 on Friday. The US Navy said it was fired upon when responding to a distress call from a vessel in the Red Sea, resulting in the sinking of the three boats. Iran’s Alborz destroyer entered the vital waterway on Monday, state media said, without providing further information on the ship’s mission.
• Tuesday’s gain follows crude’s first annual decline since 2020 after a tumultuous year dominated by concerns over increased production from outside OPEC and its allies and slowing demand growth. That was offset by bullish factors including the Israel-Hamas and Russia-Ukraine wars and signs that the Federal Reserve is done with hiking interest rates.