The Arabian Peninsula Conflict Raises Oil Prices
The clashes between the Houthi rebels and Saudi Arabia affected the prices of oil, which rose significantly on Thursday. It is thought that the unrest could disrupt the supplies.
Although experts claim that there is no need for worry, the demand for oil has increased due to the concerns about the geopolitical situation on the Arabic peninsula.
A note to clients from an analyst at London’s Energy Aspects said that “The importance of this is perhaps that the market has begun to react to geopolitical supply risks once again, a trend that has been absent in recent months.”
Thursday morning brought the price of $54.44 for a barrel of West Texas intermediate crude, a hefty 4.5% hike. Brent crude went up 4%, to $58.7 per barrel. These prices are more than 10% higher than the several years’ record low this month.
Yemen is sliding towards a civil war, as the Iran supported Houthi seized Aden, a port in the south, a hiding place of the President of Yemen, Abdu Rabuu Mansour Hadi. This situation caused the airstrikes of Saudi Arabia’s air forces. The battlefield is not even close to the Saudi oil industry production centers, but if the rebels close the route to the Suez Canal, the tankers carrying oil will be forced to go around the entire continent of Africa.
If Yemen further reduces its low oil production, of only 130.000 barrels a day, recorded in 2014, it could affect the oil market. As a reminder, Yemen peaked in production in 2001, reaching a production rate of more than 400.000 barrels per day.