LONDON — Oil prices rose sharply on Thursday amid concerns that fighting in the Arabian Peninsula between Saudi Arabia and Houthi rebels in Yemen could disrupt supplies.
The worries about a possible disruption, which analysts said is unlikely at this point, come as demand for oil is stronger than expected, causing traders to pay more attention to geopolitical concerns.
“The importance of this is perhaps that the market has begun to react to geopolitical supply risks once again, a trend that has been absent in recent months,†analysts at Energy Aspects, a London-based market research firm, wrote in a note to clients.
The price of West Texas intermediate crude, the main American benchmark, rose 4.5 percent in morning trading on Thursday to $51.44 per barrel, and Brent crude, the widely-used North Sea reference, rose 4 percent to $58.70.
Both have risen more than 10 percent since hitting multiyear lows this month.
The spike in prices on Thursday followed Saudi Arabia’s announcement on Wednesday night that it was launching airstrikes against Yemen, its neighbor to the south, in coordination with other nations in the region. The strikes, which continued on Thursday, began as Yemen slid toward civil war, and the Houthi rebels, who have received support from Iran, were close to seizing the southern port of Aden, where Yemen’s president, Abdu Rabbu Mansour Hadi, had been hiding.
Although the Saudis said they were suspending civil aviation in the southern part of the kingdom near Yemen, the fighting is a long way from the main Saudi oil production centers in the east and poses little threat to the huge oil industry there, analysts said.
Of greater concern is Yemen’s location on the Bab el-Mandeb Straits, a narrow choke point between Yemen and Africa through which tankers and other ships pass as they head around the Arabian peninsula and up the Red Sea toward the Suez Canal. If this route were closed, ships would need to go around Africa, a much longer journey.
In terms of the oil markets, the main risk from the conflict is a further reduction of Yemen’s modest oil production, which dropped to just 130,000 barrels a day last year, less than a third of what the country produced at a peak in 2001, because of disruptions and lack of investment. Yemen’s production is only a tiny fraction of world output and is unlikely to be missed.
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