Oil Prices Surge Following US-UK Attack in Yemen

 

In a recent development, the United States and the United Kingdom jointly launched an attack on locations used by Houthi rebels in Yemen. This action was taken in response to an earlier attack on a ship operating in international waters in the Red Sea. President Joe Biden made the announcement, highlighting the collaboration with Australia, Bahrain, Canada, and the Netherlands in this operation. Subsequently, there was a notable increase in crude oil prices in the global market, rising by 2.6 percent, as reported by Reuters. The Reuters report specified that the price of Brent crude oil experienced a substantial surge, rising by 4.45 percent to reach $79.25 per barrel. Additionally, the price of WTI crude saw a 2.6 percent increase, reaching $73.86. Chris Scicluna, Head of Economic Research at Daiwa Capital Markets, commented on the modest rise in crude oil prices, stating that while it remains below $80, there is no significant concern from an inflation standpoint. He emphasized that the marginal increase, although notable, is not expected to lead to anything unusual. The backdrop of this situation involves Houthi rebels, who, since mid-October of the previous year, have been targeting commercial ships in the southern part of the Suez Canal. The rebels, aligned with Iran and supported by Hamas in Gaza, believe that Israel is connected to these ships. The Houthi rebels in Yemen confirmed an attack on several cities early in the morning. Houthi official Abdul Kader al-Mortada conveyed through a post on social media that "The US-Zionist-British aggressors attacked Yemen's capital Sana'a, Hodeidah governorate, Saada, and Dhamar." It's worth noting that despite the recent surge in oil prices due to the events in Yemen, oil prices on the world market had experienced a more than 3 percent decline the previous Monday. Geopolitical tensions in the Middle East have raised concerns about a potential oil supply crisis. However, Saudi Arabia, the world's leading oil exporter, reduced oil prices, and OPEC increased oil production, contributing to the fluctuating market conditions.

Crude oil prices experienced a modest increase this morning, according to Chris Scicluna, head of economic research at Daiwa Capital Markets, as reported by Reuters. Although the price is still below $80, Scicluna doesn't anticipate any significant concerns from an inflation standpoint. He attributes this to the belief that even with a small price increase, there won't be any unusual impact. The background to the recent fluctuations in oil prices involves Yemen's pro-Iranian Houthi rebels, supported by Hamas in Gaza, who initiated attacks on commercial ships in the southern part of the Suez Canal in mid-October of the previous year. Their assertion is that Israel is connected to these ships.

Houthi rebels in Yemen confirmed an attack on several cities, including the capital Sana'a, Hodeidah governorate, Saada, and Dhamar. This revelation came from Houthi official Abdul Kader al-Mortada in a post on the X account. Despite recent attacks in Yemen causing a fresh rise in oil prices, global oil prices experienced a more than 3 percent decrease last Monday. Geopolitical tensions in the Middle East have sparked concerns about a potential oil supply crisis. However, Saudi Arabia, the world's leading oil exporter, opted to reduce oil prices. In contrast, OPEC has decided to increase oil production.