Oil giants like ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), and BP (NYSE:BP) ticked higher in pre-market trading as oil prices climbed higher. Indeed, West Texas Intermediate crude oil was up by 3.65% to $74.65 per barrel at the time of writing.
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Oil prices are rising as the conflict in the Red Sea refuses to abate. The United States and the UK have launched strikes from the air and sea against Houthi military rebels in Yemen as the rebels have attacked ships in the Red Sea.
While the Houthis had originally stated that they would be targeting Israel-linked ships, now they are attacking any ships in the Red Sea regardless of their destination. In response to the airstrikes from the U.S. and the UK, the Houthis have stated that “any American attack won’t go unpunished” and would elicit a “big” response.
Meanwhile, Citi Research has lowered its forecasts for Brent oil in 2024 and 2025, citing oversupply. Still, it estimates that prices will be above $70 per barrel this year as OPEC+ will likely keep oil markets “finely balanced.”
Citi expects Brent price this year to be $74 per barrel (down by $1) and reduced its 2025 forecast by $10 to $60 per barrel. However, it noted that recent Red Sea events in the Middle East might bring short-term upside to the risk premium.
Is USO a Good Investment?
The United States Oil Fund ETF (USO) is a good option for investors interested in getting exposure to the oil industry. Even as the USO ETF has slid by more than 1% in the past year, the ETF has soared by more than 85% over the past three years.
