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Oil prices soar two per cent following US-UK military strikes on Houthi rebels in Yemen 

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Oil prices surged by over 2% on Friday due to military strikes conducted by the United States and Britain against Houthi military targets in Yemen. This retaliation was prompted by the Iran-backed Houthi group’s attacks on shipping in the Red Sea since late last year.  

Brent crude futures increased by $1.53, marking a 2% rise to reach $78.94 per barrel, while U.S. West Texas Intermediate crude futures saw a 2.1% uptick, reaching $73.55. These gains, coupled with nearly 1% from the previous day, signalled a second consecutive weekly increase in oil prices. 

“Geopolitical risks continue to grow in the Middle East with the US and UK carrying out airstrikes against Houthis in Yemen. Potentially more concerning for oil markets is Iran having seized an oil tanker in the Gulf of Oman,” said Warren Patterson, Head of Commodities strategy at ING. 

“For now, we believe the risk of significant disruption to oil flows from the Persian Gulf is low, but it is certainly worth keeping an eye on, given the potential impact it could have on oil supply and prices.” 

The military strikes, carried out by the U.S. and the UK, targeted Houthi rebels with ties to Iran, raising concerns about a potential escalation in the regional conflict. President Joe Biden ordered the strikes in response to what he labelled as “unprecedented Houthi attacks” on international vessels in the Red Sea. Several nations, including Australia, Bahrain, Canada, and the Netherlands, supported the joint military operation. 

Houthi attacks in the Red Sea have disrupted global trade along a vital route connecting Europe and Asia, responsible for approximately 15% of the world’s shipping traffic. These attacks, initiated by the Houthis since October, were intended to show solidarity with the Palestinian militant group Hamas in its conflict with Israel.  

UK Prime Minister Rishi Sunak highlighted the disruptive impact of Houthi attacks on trade, leading to a surge in commodity prices and further aggravating the humanitarian crisis in Yemen. He affirmed the commitment of the UK’s navy to continue patrolling the Red Sea as part of a coordinated multinational initiative.