Oil prices experienced a notable increase of more than 2% on Friday after the United States and Britain executed strikes against Houthi military targets in Yemen. This action was taken in response to attacks carried out by the Iran-backed Houthi group on shipping in the Red Sea since late last year.
As of 0337 GMT, Brent crude futures rose by $1.53, equivalent to a 2% increase, reaching $78.94 per barrel. Simultaneously, U.S. West Texas Intermediate crude futures were up $1.53, or 2.1%, trading at $73.55.
These figures marked an additional boost to the nearly 1% gains observed the day before, ensuring that oil prices were on course for a second consecutive weekly rise.
The U.S. and British strikes represent a significant escalation in the Israel-Hamas conflict in the Middle East since its eruption in October. Witnesses in Yemen reported explosions across the country.
U.S. President Joe Biden underscored that the “targeted strikes” conveyed a clear message that the United States and its allies would not tolerate attacks on their personnel or allow hostile actors to jeopardize freedom of navigation. Supporting this operation were Australia, Bahrain, Canada, and the Netherlands.
The Houthi attacks in the Red Sea have disrupted international commerce along the vital route between Europe and Asia, constituting approximately 15% of global shipping traffic.
In response to these disruptions, shipping giant Maersk announced on Thursday its decision to divert all vessels away from the Red Sea for the foreseeable future, cautioning customers about potential further disruptions.
The U.S.-led attacks closely follow Iran’s seizure on Thursday of a tanker carrying Iraqi crude destined for Turkey, retaliating against the confiscation of the same vessel and its oil by the United States last year. The White House condemned this seizure.
Houthi attacks have been concentrated in the Bab al-Mandab Strait to the southwest of the Arabian Peninsula, while Iran’s seizure occurred closer to the Strait of Hormuz between Oman and Iran. Analysts express concerns about the latter, emphasizing its significance as a critical chokepoint for oil flows, with over 20 million barrels per day passing through, equivalent to around 20% of global consumption, according to ING analysts.