Oil prices climb as Iran-backed Houthi rebels attack Saudi tankers

(Image
for illustration only.)
REUTERS/US
Coast Guard

• Oil prices climbed on Thursday after Saudi Arabia
  closed a strategic shipping lane.
• The world’s largest oil producer closed the Bab
  al-Mandeb Strait after two large oil tankers were attacked by
  Iranian backed Houthi fighters with one sustaining minimal
  damage.
• Brent crude oil futures rose 0.6% to $74.35 per barrel
  on Thursday at 6 48 GMT and US oil reserves fell to a three and
  a half year low,
  Reuters reported.

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Oil prices were driven higher for the third consecutive day on
Thursday, after Saudi Arabia closed a strategic shipping lane in
the Red Sea following an attack on two of its large oil-tankers
by Iranian backed Houthi fighters.

Brent crude oil futures rose 0.6% to $74.35 per barrel on
Thursday at 6 48 GMT, after a gain of 0.7% on Thursday, and US
oil reserves fell to a three and a half year low,
Reuters reported.

US West Texas Crude futures were also up 5 cents to $69.35 to the
barrel.

“The announcement this morning that the Saudis have closed some
shipping lanes in the Gulf because of rebel Houthi attacks also
gives the bulls something to launch off,” Greg McKenna, chief
market strategist at AxiTrader, told Reuters.

On Thursday Saudi Arabia said it was “temporarily halting” all
oil shipments through the Bab al-Mandeb shipping lane after the
two tankers were attacked, closing off a vital export channel for
the world’s largest oil producer.

Khalid al-Falih, the Saudi energy minister said in a statement
that the two oil tankers, each carrying two million barrels of
oil, had been attacked and one sustained minimal damage.

“Saudi Arabia is temporarily halting all oil shipments through
Bab al-Mandeb Strait immediately until the situation becomes
clearer and the maritime transit through Bab al-Mandeb is safe,”
said the minister.

Much of the Crude oil that leaves Saudi Arabia to the North West
via the Suez Canal and the SUMED pipeline is first shipped
through the Bab al-Mandeb Strait, which passes close to Yemen.

According to the US Energy Information Administration, around 4.6
million barrels of crude and refined petroleum exports per day
flowed through the Strait in 2016, headed towards Europe, Asia
and the United States.

The Bab al-Mandeb Strait between Yemen and Djibouti is just 20km
wide, making shipping vulnerable to attack from the Houthi’s in
war-torn Yemen. The Iranian backed Houthi’s have been fighting a
Saudi-Arabian led coalition in a bloody civil war in Yemen for
around three years, with the Saudi’s exports presenting a
strategic target.

The latest disruption is another impact of a conflict which has
cost around 50,000 lives through famine and war, which the US and
UK have fueled through arms sales to the Saudi-led coalition.

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