Oil retreats after three-day rally

Global benchmark Brent crude futures fell to around $79 a barrel, while U.S. crude was below $74. Government data released on Wednesday showed that U.S. crude oil production reached a new record high of 13.3 million barrels per day last week. Meanwhile, an Iran-backed militant group warned that it would retaliate if the U.S. launched military strikes on its bases.

Crude oil had recovered this week as an increase in Red Sea attacks prompted shippers to divert their vessels away from the key energy transit point. Investors are still expecting the first annual decline since 2020, as they remain unconvinced that OPEC+ can tighten the market in the coming quarter despite the group's decision to extend supply cuts. This comes alongside rising production in countries outside the cartel, including the U.S., Guyana, and Brazil.

"This is a market with a lot of tension, and specifically supply tensions," said Vishnu Varathan, head of economics and strategy at Mizuho Bank.

While the U.S. is considering military action against the Houthis, Washington prefers a diplomatic solution and is working with Western and Arab allies to support a maritime protection force. Nearly 12 percent of global trade passes through the Red Sea, and due to fears of attacks, more than 100 container ships are currently taking the long route around Africa.

News Source: 12punto