JavaScript is off. Please enable to view full site.

Oil prices surge after Saudi air strikes in Yemen

Thursday, March 26, 2015, 19:22 GMT+7
Oil prices surge after Saudi air strikes in Yemen
People gather at the site of an air strike at a residential area near Sanaa Airport March 26, 2015. Warplanes from Saudi Arabia and Arab allies struck Shi'ite Muslim rebels fighting to oust Yemen's president on Thursday, a gamble by the world's top oil exporter to check Iranian influence in its backyard without direct military backing from Washington

Brent crude oil soared more than 4 percent towards US$59 a barrel on Thursday after Saudi Arabia and its Gulf Arab allies began a military operation in Yemen, which sits on a key shipping passage between Europe and the Arab Gulf.

The air strikes against Houthi rebels, who have driven the president from Yemen's capital Sanaa, could stoke concerns about the security of Middle East oil shipments if the conflict widens.

Brent futures were up $2.47 at $58.93 by 1158 GMT. U.S. crude was up $2.16 at $51.37 a barrel. Brent and U.S. crude prices spiked around 6 percent earlier in the session but pared gains in European trading.

"Geopolitical risk like this has been on the back burner for a while because we've been focussing on global oversupply," said Ole Hansen, head of commodity strategy at Saxo Bank.

"This news has not made the oversupply go away. The upside potential is limited unless something escalates. We need to see how this unfolds over the next couple of days," he said.

Iranian officials demanded an immediate halt to Saudi-led military operations in Yemen and said Tehran would make all necessary efforts to control the crisis there, Iranian news agencies reported.

In order to export to Europe, Arab producers have to ship oil past Yemen's coastlines via the Gulf of Aden to get to the Suez Canal.

Four Egyptian naval vessels have passed through the Suez Canal en route to Yemen to secure the Gulf of Aden, maritime sources said.

The waters between Yemen and Djibouti, known as Bab el-Mandeb, are less than 40 km (25 miles) wide. They are considered a "chokepoint" to global oil supplies by the U.S. Energy Information Administration (EIA).

The EIA estimates that 3.8 million barrels a day of crude oil passed through Bab el-Mandeb in 2013, the latest year for which figures were available.

The region is heavily populated with Western military forces. The United States and France operate large military bases in Djibouti. NATO's anti-piracy fleet also operates from the Gulf of Aden.

While the strikes have not yet disrupted major oil facilities of key Gulf producers, such as Saudi Arabia, there are concerns that the conflict might widen. The Shi'ite Houthis have received some support from Iran, Saudi Arabia's long-time rival for dominance in the Middle East.

State-run Kuwait Petroleum Corp said the OPEC member country had raised security around its oil facilities after the military operation in Yemen.

Yemen shut its major seaports on Thursday, industry and local sources said.

Reuters

More

Read more

Global spread of coronavirus raises pandemic fears

Italy sealed off the worst-affected towns and banned public gatherings in much of the north, including halting the carnival in Venice, where there were two cases, to try to contain the biggest outbreak in Europe

21 hours ago
;

Photos

VIDEOS

Experience summer sand-boarding in Mui Ne

Sand-boarding, a popular activity amongst local children in the coastal tourism town of Mui Ne in south-central Vietnam, is attracting hundreds of tourists to the Red Sand Dunes

Young maple trees given better protection as Hanoi enters rainy season

The trees are currently growing well, with green leaves and healthy branches.

Hunting skinks for food in southern Vietnam

Skink meat is known to be soft, tasty, and highly nutritious.

Vietnamese-made app allows people to grow real veggies via smartphone

Nguyen Thi Duyen, a young engineer in Hanoi, developed the app and its related services to help busy people create their own veggie gardens.

Chinese tourists hit by Vietnamese over dine and dash

Four Chinese were reportedly injured, with one having a broken arm.

Latest news