Oil prices ended lower on Tuesday as traders focused on a rebound in crude output in parts of the United States and rising supplies from Libya and Norway rather than supply risks from conflicts in Europe and the Middle East.

Data released by the North Dakota Department of Natural Resources showed that the state’s crude oil production fell by 250,000 barrels to 300,000 barrels on the 23rd, which was smaller than the 700,000 barrels per day drop a week ago. The North Dakota Pipeline Authority, the third-largest U.S. oil-producing state, said some oil output was back to normal after being shut down due to severe cold. However, production is still down by as much as 300,000 barrels per day.

John Kilduff, partner at Again Capital LLC, said continued weakness in U.S. gasoline demand has also hit oil prices.

The Asian giant once again kept its prime lending rate unchanged on Monday, amid expectations for further policy easing to support the economy. This could mean demand for oil could weaken in the coming months.

Market sources quoted data from the American Petroleum Institute as saying that while U.S. crude oil inventories fell by 6.67 million barrels last week, gasoline inventories increased by 7.2 million barrels. Oil trader Gunvor Group expects U.S. crude production to grow by 500,000 barrels per day this year.

Data from the American Petroleum Institute (API) shows that in the week of January 19, U.S. API crude oil inventories were -6.674 million barrels, compared with the previous value of +483,000 barrels. Increases in production elsewhere put further pressure on prices. Data from the Norwegian Offshore Administration (NOD) showed that Norwegian crude oil production rose to 1.85 million barrels per day in December, up from 1.81 million barrels per day last month and exceeding analysts’ expectations. The forecast is 1.81 million barrels per day.

In Libya, production at the 300,000 barrels per day Sharara oil field resumed on January 21 after protests that had halted production since earlier this month.

Bob Yawger, head of energy futures at Mizuho Bank, said, “Geopolitical pressure is not enough to really boost the oil market, but it is enough to prevent the market from bottoming out.”

Crude prices rose about 2% on Monday after a Ukrainian drone struck Novatek’s Ust-Luga Baltic fuel export terminal near Russia’s second city of St. Petersburg, stoking supply concerns.

Tensions are rising in the Middle East after US and British forces launched a second joint strike on Houthi rebel positions in Yemen.

The United States has advised ships continuing to sail through the Red Sea to use “extreme caution,” a major trade group said. This comes after the United States and Britain launched a new round of air strikes on eight Houthi armed targets in Yemen on Monday. Intertanko, which represents oil and gas tanker owners around the world, said in a statement that U.S. Naval Forces Central Command told the organization that ships with ties to the United States, Britain and Israel remain at high risk. The organization also said that unlike the situation after the first attack by the United States and Britain earlier this month, there were no recommendations to suspend ship traffic after the recent air strikes by the two armed forces. Even so, at least four tanker owners have stated that they do not intend to resume navigation through the region amid attacks by Houthi armed forces and retaliatory air strikes by the United States and Britain. Lars Barstad, CEO of Frontline Management AS, the subsidiary responsible for the management of one of the world’s largest tanker owners, said that the current situation is that no sensible shipowner would choose to sail through. The risk to the crew, equipment and environment is too high. .

Ongoing geopolitical tensions in the Middle East are likely to escalate, putting commercial shipping networks in the region at greater risk and potentially driving up freight rates further, sources said.

Market players said rising geopolitical tensions could lead more ships to avoid Red Sea routes, which would lengthen sailing times, tighten ship supply and raise additional risk premiums and freight rates.

Shipping sources said the LR2 tanker, which can carry 90,000 tons of refined oil, currently costs up to $1 million to sail on the Persian Gulf-Europe route via the Cape of Good Hope, while previously the more common shipping method was through the Suez Canal. An executive at a global commodities trading company said LR2 tankers, which are much smaller than Suezmax tankers, would cost more than $500,000 for a seven-day trip. Because the ship had to be ballasted on the same route, the actual AWRP would be twice that number if it loaded cargo again in the Red Sea, the executive said.

Platts data shows that the price of LR2 tankers on the Persian Gulf to UK route has increased by more than 25% in the past four trading days, reaching US$5.65 million on January 22 based on the Suez route. That means they had to pay nearly $6.4 million to $6.65 million for the voyage past the Cape of Good Hope.

A tanker broker said a Suezmax tanker on a Red Sea voyage from Ceyhan to South Asia paid an AWRP of $150,000 on January 17, more than four times the $33,000 a week earlier. In this case, the AWRP is on the owner’s account and is factored into the freight itself, but in most cases it is much higher than this amount and is paid separately by the charterer, the broker said.

Freight market participants say the Bimco & Intertanko proposal just over 10 days ago has had a major impact, with many tankers now actually using Cape Town to deliver cargo to Europe. Early on, the option to use the Cape of Good Hope route was included in the charterparty, but was rarely used.

Dozens of oil tankers have been diverted to the Cape Port since geopolitical tensions in the Red Sea region escalated last week. An executive at a major tanker company said: “Some fixtures are now being built based solely on the Cape option, with no Suez option at all.”

Shipping sources said the Suez Canal is losing business due to geopolitical tensions in the Red Sea region and the Suez Canal raising transit fees from January 1. While the Suez Canal has offered discounts, only a few are willing to accept them because of the security risks involved. .