Key Insights
- Brent crude rose 2.3% to $79/barrel on Friday after US and UK strikes in Yemen, targeting Houthis for shipping attacks.
- Prices also lifted by Iran seizing oil tanker with Iraqi crude, seen as retaliation for US confiscating Iranian oil last year.
- Extra OPEC+ output cuts, with Saudi extending voluntary reductions, have tightened supply amid escalating Yemen conflict.
LONDON – Brent crude oil prices rose 2.3% to $79 a barrel on Friday after the United States and Britain conducted airstrikes in Yemen targeting Houthi militants, seen as retaliation for attacks on shipping lanes that have disrupted global trade.
The strikes represent a major escalation in the conflict between a Saudi-led coalition and the Iran-aligned Houthis. Explosions were reported across Yemen after the bombing raids.
U.S. President Joe Biden said the “targeted strikes” with Saudi forces would send the message that attacks imperiling freedom of navigation would not be tolerated after assaults in the Red Sea and Bab al-Mandab Strait.
Global shipping giant Maersk this week rerouted vessels away from the Red Sea, a key trade artery for Asia and Europe transit accounting for 15% of total traffic.
Prices were also buoyed by Iran’s seizure of a tanker carrying Iraqi oil, seen as an act of retaliation against U.S. confiscation of Iranian crude last year – which the White House condemned.
The supply curbs from OPEC+ members have further tightened markets, with the producer group sticking to output cuts of 2.2 million bpd in Q1 2024.
Top OPEC producer Saudi Arabia extended voluntary extra reductions, while Russia widened crude and fuel export cuts by 200,000 bpd.
Other members like the UAE and Angola reined in output, with Nigeria the only major OPEC+ player boosting supply by 50,000 bpd in December, latest data showed.
Analysts say oil prices could extend gains as military escalation risks further supply instability amid already tight markets fearing shortfalls from Russia this year due to Western sanctions.
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