There’s nothing like a scare about the safety of middle-eastern sea-lanes to send oil prices higher, particularly when the scare involves fears of a conflict between the region’s two biggest powers.
Crude oil prices were back at their highest in two weeks at $51.32 a barrel by midmorning in Europe, after Saudi Arabia and its allies launched airstrikes against the Houthi rebels who have overrun much of Yemen, including a military airbase that was used until recently by U.S. forces.
Prices have now surged 8% in the last 48 hours. The impact of the flare-up has been magnified by the fact that many participants in the market have bet on prices staying low all through the year. Those caught in ‘short’ positions have had to cover those positions in a hurry as the price rebounds. Fundamentally, though, the market remains oversupplied, and U.S. stocks of crude and fuel are at record highs.
Ten other countries, including other Gulf Arab states and Egypt and Sudan, took part in the airstrikes. The U.S. has agreed to provide logistical and intelligence support but nothing more.
In addition to the airstrikes, Saudi Arabia has moved thousands of troops and large amounts of heavy weaponry to the border with Yemen, in what may presage a full-scale invasion of the country in support of its beleaguered President Abd-Rabbu Mansour Hadi.
The dramatic escalation increases the risk of another front opening in a sectarian conflict that is raging across the Middle East, pitting Sunni Muslims against Shia ones. The Houthi are part of Yemen’s large Shia minority, while Saudi Arabia is the largest and most powerful Sunni state in the region.
The Foreign Ministry of Iran, the largest Shia power, warned Thursday that the airstrikes were “a dangerous step” that will worsen the crisis.
Oil prices are always sensitive to geopolitical problems in the region, but particularly so when they threaten vital choke-points in global sea-lanes. Located at the south-western tip of the Arabian peninsular, Yemen commands the gateway to the Red Sea and the Suez Canal, through which around 5% of the world’s oil passes, according to the Energy Information Administration.
http://www.msn.com/en-us/money/mark...o-to-war-in-yemen/ar-AAa1KFL?ocid=mailsignout
Crude oil prices were back at their highest in two weeks at $51.32 a barrel by midmorning in Europe, after Saudi Arabia and its allies launched airstrikes against the Houthi rebels who have overrun much of Yemen, including a military airbase that was used until recently by U.S. forces.
Prices have now surged 8% in the last 48 hours. The impact of the flare-up has been magnified by the fact that many participants in the market have bet on prices staying low all through the year. Those caught in ‘short’ positions have had to cover those positions in a hurry as the price rebounds. Fundamentally, though, the market remains oversupplied, and U.S. stocks of crude and fuel are at record highs.
Ten other countries, including other Gulf Arab states and Egypt and Sudan, took part in the airstrikes. The U.S. has agreed to provide logistical and intelligence support but nothing more.
In addition to the airstrikes, Saudi Arabia has moved thousands of troops and large amounts of heavy weaponry to the border with Yemen, in what may presage a full-scale invasion of the country in support of its beleaguered President Abd-Rabbu Mansour Hadi.
The dramatic escalation increases the risk of another front opening in a sectarian conflict that is raging across the Middle East, pitting Sunni Muslims against Shia ones. The Houthi are part of Yemen’s large Shia minority, while Saudi Arabia is the largest and most powerful Sunni state in the region.
The Foreign Ministry of Iran, the largest Shia power, warned Thursday that the airstrikes were “a dangerous step” that will worsen the crisis.
Oil prices are always sensitive to geopolitical problems in the region, but particularly so when they threaten vital choke-points in global sea-lanes. Located at the south-western tip of the Arabian peninsular, Yemen commands the gateway to the Red Sea and the Suez Canal, through which around 5% of the world’s oil passes, according to the Energy Information Administration.
http://www.msn.com/en-us/money/mark...o-to-war-in-yemen/ar-AAa1KFL?ocid=mailsignout
