Energy
Friday, January 12th, 2024 5:42 pm EDT
Key Points
- Military Strikes Impact Oil Prices: Oil prices experienced a significant surge following military strikes carried out by the United States and Britain against targets in Houthi-controlled areas of Yemen. West Texas Intermediate (WTI) and Brent futures spiked over 4%, reaching their highest levels since December 27. U.S. crude oil rose to $75.25 per barrel, while the global benchmark, Brent, touched $80.75. This escalation in prices was driven by increased tensions in the Red Sea region.
- First Known U.S. Strike Against Houthis in Yemen: The military strikes were a response to Houthi attacks on vessels in the Red Sea, targeting global shipping, including vessels from the U.S. and Israel. The Houthis, backed by Iran, have been engaged in retaliatory actions against the war in Gaza. The strikes marked the first known instance of the United States directly targeting the Iran-backed Houthis in Yemen. The move is framed as a clear message against attacks on personnel and threats to freedom of navigation in critical commercial routes.
- Geopolitical Complexities Impacting Oil Markets: The situation underscores the geopolitical complexities influencing global oil markets. The disruptions in the Red Sea and Suez Canal routes have led major shipping companies to reroute via southern Africa, resulting in longer and more expensive journeys and pushing up ocean freight rates. President Joe Biden emphasized that the targeted strikes aim to deter attacks on personnel and safeguard freedom of navigation. The vow to take further measures highlights the ongoing challenges and uncertainties in the region, contributing to increased volatility in oil prices.
Oil prices surged following military strikes carried out by the United States and Britain against targets in Houthi-controlled areas of Yemen, escalating tensions in the Red Sea. West Texas Intermediate (WTI) and Brent futures saw a spike of over 4%, reaching their highest levels since December 27. U.S. crude oil reached $75.25 per barrel, and the global benchmark touched $80.75. Both WTI and Brent were trading above their 50-day moving averages for the first time since late October. The military strikes were a response to Houthi attacks on vessels in the Red Sea, targeting global shipping, including U.S. and Israeli vessels, as retaliation for the Gaza war. The disruption in the Red Sea and Suez Canal routes led major shipping companies to reroute via southern Africa, resulting in longer and more expensive journeys, pushing up ocean freight rates. U.S. President Joe Biden stated that the strikes conveyed a clear message against attacks on personnel and threats to freedom of navigation in critical commercial routes. While the U.S. has previously conducted strikes against Iranian proxies in Syria and Iraq, this marked the first known strike against the Iran-backed Houthis in Yemen. The leader of Yemen’s Houthis, Abdul-Malik al-Houthi, responded with a vow to confront American aggression, warning of a significant response. Biden emphasized a commitment to taking further measures to protect people and international commerce if deemed necessary. The situation underscores the geopolitical complexities impacting global oil markets, with tensions in the Red Sea contributing to increased volatility in oil prices.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/12/oil-prices-jump-as-us-britain-strike-on-houthis-in-yemen.html
