Thursday, 26 March 2015 18:23
LONDON: Oil prices surged Thursday after Saudi Arabian jets struck rebel targets in Yemen, sparking fears that a spiralling crisis in the country could threaten crude producers in the Middle East.
Brent North Sea crude for delivery in May rallied $ 2.46 to reach $ 58.94 a barrel in London midday deals.
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US benchmark West Texas Intermediate (WTI) for May jumped $ 2.17 to $ 51.37 a barrel.
The contracts had begun rallying on Wednesday following news that Yemen’s President Abedrabbo Mansour Hadi was rushed to a “secure location” after a warplane attacked his presidential complex.
Yemen borders major oil producer Saudi Arabia, which on Wednesday launched strikes against Huthi rebels in a bid to help save Yemen’s embattled leader as the country teetered on the brink of civil war.
Yemen has been gripped by growing turmoil since the Shiite rebels launched a power grab in Sanaa in February.
“The geopolitical tensions in Yemen are pushing prices higher,” Daniel Ang, an investment analyst with Phillip Futures, told AFP.
“Yemen is not a big producer but it is a trade hub in the region so tensions over there could cause a disruption in the trading activities for energy products,” said the Singapore-based analyst.
The turmoil has overshadowed the effect of rising US crude supplies, which added another 8.2 million barrels in the week ending March 20, analysts said.
World oil prices had collapsed by about 60 percent in the six months to the start of February, with strong US production exacerbating elevated output by the OPEC cartel.
“The higher the oversupply on the oil market became in recent months, the more the geopolitical risks were ignored,” Commerzbank analysts said in a note to clients on Thursday.
“These have suddenly come back into sharp focus, however, following the Saudi-led military air strikes carried out by ten Gulf states against the Huthi rebels in Yemen.”
Copyright Reuters, 2015
