Oil prices soar after US, Britain strikes on Yemen

Singapore — Oil prices rose more than 2% on Friday as the US and Britain carried out strikes against Houthi military targets in Yemen in retaliation for attacks by the Iran-backed group on shipping in the Red Sea starting from late last year.

Brent crude futures were up $1.53, or 2%, at $78.94 a barrel, while US West Texas Intermediate crude futures were trading $1.53, or 2.1% higher, at $73.55 at 3.37am GMT.

The benchmarks were adding to gains of nearly 1% from the day before, ensuring prices were on track for a second straight weekly rise.

The US and British strikes are one of the most dramatic demonstrations to date of the widening of the Israel-Hamas war in the Middle East since its eruption in October. Witnesses in Yemen confirmed explosions throughout the country.

US President Joe Biden said the “targeted strikes” were a clear message that the US and its partners will not tolerate attacks on its personnel or “allow hostile actors to imperil freedom of navigation”.

Australia, Bahrain, Canada and the Netherlands supported the operation, he said.

The Houthi attacks in the Red Sea have disrupted international commerce on the key route between Europe and Asia, which accounts for about 15% of the world’s shipping traffic.

Since October, Houthis have attacked commercial vessels in the Red Sea to show support for Palestinian militant group Hamas in its fight against Israel.

Shipping giant Maersk said on Thursday it will divert all vessels away from the Red Sea for the foreseeable future, warning customers of further disruptions.

The US-led attacks also closely follow Iran’s seizure on Thursday of a tanker with Iraqi crude destined for Turkey in retaliation for the confiscation last year of the same vessel and its oil by the US. The White House has condemned the seizure.

The Houthi attacks have been concentrated on the Bab al-Mandab Strait to the southwest of the Arabian Peninsula. Iran’s seizure was closer to the Strait of Hormuz between Oman and Iran, which analysts say is a major concern.

“The Gulf of Oman is very near the Strait of Hormuz, a critical chokepoint for oil flows. More than 20-million barrels per day of oil moves through the Strait of Hormuz, which is equivalent to around 20% of global consumption,” ING analysts said in a note.

Reuters