Oil Up 5% After Saudi Strikes In Yemen; Dollar Limits Gains
NEW YORK, March 26 (Reuters) - Oil jumped about 5 percent on Thursday, rallying a second straight day, after air strikes in Yemen by Saudi Arabia and its Gulf Arab allies sparked fears of a bigger Middle East battle that could disrupt world crude supplies.
The military operation against Houthi rebels, who have driven the president from Yemen's capital Sanaa, has not affected oil facilities of major Gulf producers.
But fears the conflict could spread has stoked concerns about Middle East oil shipments.
Saudi rival Iran, which backs the Houthi rebels, denounced the air strikes. Russian President Vladimir Putin, in a phone conversation with his Iranian counterpart, called for an "immediate ceasefire." Pakistan, a Riyadh ally far away from the conflict, promised a "strong response" to any threat to Saudi integrity.
U.S. Secretary of State John Kerry touched on the conflict with Iran's foreign minister before talks on Thursday on Tehran's nuclear program.
Analysts doubt any possibility of an all-out war and say only a temporary lift to oil prices is expected amid continued worries about oversupply.
Benchmark Brent oil jumped more than $3 a barrel before paring gains as the dollar rebounded from Wednesday's drop, making dollar-denominated commodities costlier in other currencies.
Brent settled up $2.71, or 4.8 percent, at $59.19 a barrel. U.S. crude finished up $2.22, or 4.5 percent, at $51.43. Oil prices rose 3 percent on Wednesday on a weak dollar.
"A lot of times you get the market reacting dramatically right off the bat to events like these, before people begin putting things in perspective after a greater study of the risks involved," said Phil Flynn, analyst at the Price Futures Group in Chicago.
Arab producers have to ship their crude past the Yemen coastline via the Gulf of Aden to get to the Suez Canal, a key passageway to Europe.
The waters between Yemen and Djibouti, known as Bab el-Mandeb, are less than 40 km (25 miles) wide, and considered by the U.S. Energy Information Administration to be a "chokepoint" for global oil supplies. The EIA estimated 3.8 million barrels per day passed through Bab el-Mandeb in 2013. Egypt sent naval vessels on Thursday to help secure the passage.
Barclays analyst Michael Cohen said the conflict potentially exacerbates tensions in Libya, Syria and Iraq, with Saudi Arabia becoming an activist of its regional policy.
"What's going on right now is a trend in the region," he said.
(Additional reporting by Jessica Resnick-Ault in New York; Himanshu Ojha, David Sheppard in London; Aaron Sheldrick, Osamu Tsukimori in Tokyo; Meeyoung Cho in Seoul; Henning Gloystein and Florence Tan in Singapore; Editing by Marguerita Choy and Tom Brown)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Rooftop Solar Now 4th Largest Source of Electricity in Australia
- US Confirms Reimposition of Oil Sanctions against Venezuela
- EU, Industry Players Ink Charter to Meet Solar Energy Targets
- Analyst Says USA Influence on Middle East Seems to be Fading
- Russian Ships to Remain Banned from US Ports
- Brazil Court Reinstates Petrobras Chair to Divided Board
- EIB Lends $425.7 Million for Thuringia's Grid Upgrades
- Var Energi Confirms Oil Discovery in Ringhorne
- Seatrium, Shell Strengthen Floating Production Systems Collaboration
- An Already Bad Situation in the Red Sea Just Got Worse
- What's Next for Oil? Analysts Weigh In After Iran's Attack
- USA Regional Banks Dramatically Step Up Loans to Oil and Gas
- EIA Raises WTI Oil Price Forecasts
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Venezuela Authorities Arrest Two Senior Energy Officials
- Namibia Expects FID on Potential Major Oil Discovery by Yearend
- Oil Markets Were Already Positioned for Iran Attack
- Is The Iran Nuclear Deal Revival Project Dead?
- Petrobras Chairman Suspended
- Oil and Gas Executives Predict WTI Oil Price
- An Already Bad Situation in the Red Sea Just Got Worse
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil and Gas Execs Reveal Where They See Henry Hub Price Heading
- Equinor Makes Discovery in North Sea
- Macquarie Strategists Warn of Large Oil Price Correction
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Standard Chartered Reiterates $94 Brent Call
- Chevron, Hess Confident Embattled Merger Will Close Mid-2024
- Analysts Flag 'Remarkable Feature' of 2024 Oil Price Rally