From Dow Jones & Company:

Iran’s decision to send a warship into the Red Sea has sparked concerns among oil traders, but initially, crude prices dipped back into negative territory after an early surge. However, this move has alarmed analysts, who are warning of a potential wider regional conflict. The U.S. military opened fire on Iran-backed Houthi rebels in the Red Sea, and has paused all transit through the Red Sea and the Gulf of Aden until further notice. Meanwhile, there are indications that the U.S. and U.K. are preparing a larger military operation against the Houthis in Yemen.

Senior Biden administration officials have made frequent trips to Beirut recently, to avert the opening of a second warfront between Israel and Hezbollah. An expansion of the conflict into Lebanon would present a “clear pathway” to a wider regional war. Iran-backed militias have fired hundreds of rockets at bases housing U.S. troops and areas near U.S. personnel in Iraq and Syria, prompting escalations. Oil futures jumped early Tuesday as traders reacted to Iran’s decision to deploy the warship but subsequently turned south to begin the new year with losses.



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