The Strategist

Oil Prices Jumped on the Ground of Military Conflict in Yemen

03/26/2015 - 14:11

The southwest corner of the Arabian Peninsula has become a full-scale hotspot.
Start of international intervention in Yemen will not only add heat to fire, blazing now in the Middle East, but also led to a sharp rise in oil prices.
Of course, the bombing and missile air strikes of nearly a dozen Arab League countries on  Huthis movement positions in Yemen and the rise in oil prices by nearly 6% are directly related to each other. Located on the Arabian Peninsula, Yemen, as well as all other states of the peninsula, produces oil, but it does not play any significant role in the global oil sector because it accounts for only 0.2% of its production. This, however, does not prevent him to influence the pricing of black gold due to important strategic position. Influence of Yemen, locking out the Red Sea and controlling the northern coast of the Gulf of Aden and separating them Bab-el-Mandeb, is difficult to overestimate in terms of Middle Eastern oil transportation.

The price of a barrel of Brent crude oil in the early morning on the London Stock Exchange rose by $ 3.23 (5.7%) and reached 59.71 dollars.

- No one will notice the lack of thousands oil barrels from Yemen, - explained to Bloomberg expert on energy issues, with thirty years of experience in the industry and head of the Singapore company Vautrain & Co. John Vautrain.
- However, millions of Saudi oil barrels are extremely important to the global economy.

In 2013, Yemen, according to the US Energy Information Administration, produced approx. 133 thousand barrels of oil per day and has held place of 39 largest producer of black gold. Finest hour of the oil industry in Yemen was at the turn of the century. In 2001, the country produced 440 thousand barrels per day.

Yemen controls the Bab-el-Mandeb, the fourth in the world in terms of waterway freight passing. In 2013, daily passing through the strait was 3.8 million barrels of oil per day. Closing this will block the strait for oil tankers plying from the Persian Gulf route to the Suez Canal. Ships will have to go around Africa, what will significantly increase delivery time for the black gold to European consumers and its cost.

Saudi Arabia, UAE, Bahrain, Qatar and Kuwait planes participated in night bombing of Huthis. These states, says Saudi Press Agency, responded to the request for help of Yemeni President Abd Rabbo Mansour Hadi, who left Aden on Wednesday.

Beginning of the intervention in Yemen is a continuation of the struggle between Saudi Arabia and Iran for leadership in the region. Huthis are Shiites and therefore are in alliance with Tehran, despite of claiming to be acting independently of the Iranians and protect their own interests. They toppled Sunni government Hadi, which now is being protected by the Sunni kingdoms and emirates of the Gulf, as well as Egypt, Jordan and Pakistan.