Oil steadied on Tuesday as investors considered the potential impact on oil supply from attacks by Yemen’s Iran-aligned Houthi militants against ships in the Red Sea, which have disrupted maritime trade and forced companies to reroute vessels.

The United States on Tuesday announced the creation of a multinational operation to safeguard Red Sea commerce. The United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain are among the nations involved.

was up 9 cents at $78.04 a barrel by 1100 GMT. U.S. West Texas Intermediate crude for January, which expires on Tuesday, was down 1 cent at $72.46 while the more active February contract lost only 2 cents.

Though the attacks on shipping have boosted the geopolitical risk premium, “the actual effect on oil flows is likely to be limited”, said John Evans of oil broker PVM.

“The attacks have not hit anything that would interfere with production,” he said.

Crude had climbed nearly 2% on Monday, driven up by fears over the disruptions to trade via the Suez Canal, through which about 12% of world shipping traffic passes.

Goldman Sachs analysts said the disruption is unlikely to have a large effect on crude and liquefied (LNG) prices because opportunities to reroute vessels suggest that production should not be directly affected.

Oil major BP (NYSE:) has temporarily halted transit through the Red Sea and oil tanker group Frontline (NYSE:) on Monday said its vessels would avoid the route – signs that the crisis was broadening to include energy shipments.

Also in focus this week will be the latest snapshot of U.S. supplies. inventories are expected to decline by 2.2 million barrels, a Reuters poll showed.

The first of the week’s two supply reports, from the American Petroleum Institute, is due at 2130 GMT.
Source: Reuters