Oil prices drop 3% as Red Sea disruptions ease

The news: Oil prices have fallen sharply overnight as more shipping companies said they were ready to transit the Red Sea route again, easing concerns about supply disruptions amid tensions in the Middle East.

The numbers: Brent crude futures settled 3% lower at USD77.15 a barrel, while US West Texas Intermediate (WTI) crude fell 3.2% to USD71.77 a barrel. The falls followed a 2% decline in the previous session.

The context: Prices eased after Denmark's Maersk indicated it will route almost all container vessels sailing between Asia and Europe through the Suez Canal, diverting only a handful around Africa, while France's CMA CGM is also increasing the number of vessels travelling through the Suez Canal. "The perception is that the Red Sea route is reopening and will bring supply to market weeks faster," Price Futures Group analyst Phil Flynn told Reuters. Major shipping companies had stopped using Red Sea routes and the Suez Canal earlier this month after Yemen's Houthi militant group began targeting vessels.