Global oil prices surge 3% amidst US, UK strikes following Houthi attacks

WEB DESK: In a significant turn of events, oil prices surged by approximately 3 per cent on Friday, driven by the redirection of some oil tankers in the Red Sea.

This move comes in the aftermath of overnight air and sea strikes carried out by the United States and Britain on Houthi targets in Yemen.

The strikes were a response to attacks on shipping by the Iran-backed Houthi group.

Reports from witnesses in Yemen confirm explosions across the country, underscoring the intensity of the military actions.

Brent crude futures experienced a notable increase of $2.21, or 2.9 per cent, reaching $79.62 per barrel at 1350 GMT.

Simultaneously, US West Texas Intermediate crude futures saw a rise of $2.13, or 3 per cent, hitting $74.15. Both benchmarks appear set for a second consecutive weekly rise.

The military strikes by the US and UK were in retaliation for Houthi attacks on commercial vessels in the Red Sea since October, particularly concentrated in the Bab al-Mandab Strait southwest of the Arabian Peninsula.

Notably, these attacks were perceived as a show of support for Hamas in its conflict against Israel.

The escalation of tensions raises concerns about the Israel-Hamas conflict potentially evolving into a broader Middle East conflict, impacting oil supplies from the region.

Of particular concern is the vital Strait of Hormuz, located on the opposite side of the Arabian Peninsula between Oman and Iran. Iran’s recent seizure of a tanker carrying Iraqi crude destined for Turkey heightened anxieties.

Energy analysts caution that a disruption in a significant portion of Strait of Hormuz flows could have severe repercussions, surpassing the impact of the 1970s oil price shocks and the Ukraine war on gas markets.

Saul Kavonic, an energy analyst at MST Marquee, emphasised the potential risks to already fragile supply chains and stock levels.

US President Joe Biden characterised the strikes in Yemen as a clear message that the United States and its allies will not tolerate attacks on personnel or threats to freedom of navigation.

In response, a Houthi spokesperson declared the group’s intent to persist in targeting shipping headed towards Israel.

Saudi Arabia, a key oil exporter and regional power, has called for restraint, urging all parties to avoid escalation while closely monitoring the situation.

The Houthis’ attacks in the Red Sea have already disrupted international commerce on a route connecting Europe and Asia, which accounts for about 15 per cent of the world’s shipping traffic.

Shipping companies, including industry giant Maersk, are diverting vessels away from the Red Sea and cautioning customers about potential disruptions.

The situation remains fluid, with global economic and geopolitical implications hanging in the balance.

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