Oil prices rose as much as 4% on Friday after the US and UK launched missile attacks on Iranian-backed Houthi rebels in retaliation for a Red Sea ship attack.
The price of Brent crude, the world benchmark, soared above $80 a barrel to its highest price this year, before falling to around $79 a barrel by midday in New York. As of 10:30 a.m., Brent was up about 2%.
The price of West Texas Intermediate crude oil, the US benchmark, exceeded $75 per barrel. By mid-morning, prices were up about 1.9% to $73.35.
Natural gas prices also rose significantly. Natural gas prices rose 4.7% by mid-morning, after initially rising nearly 8%.
AFP news agency reports:
Following weeks of attacks on Red Sea shipping ships by the Iranian-backed Houthis, who say they are acting in solidarity with Palestinians in the war-torn Gaza Strip, U.S. and British forces entered the rebel-controlled Gaza Strip on Friday. The attack on Yemen focused attention on the oil market.
“The concern in the oil market is that the region is on an unpredictable escalating path, and oil supplies are certain to eventually disappear at some point in the future,” said SEB Bank Chief Commodity Analyst. , Bjarne Schieldrop pointed out.
He said if coalition strikes fail to destroy Houthi weapons and oil tankers have to circumnavigate Africa, up to 80 million barrels could be trapped in transit, with prices falling to 5.5 million per barrel. He pointed out that the price would rise by ~$10.
Since the Gaza conflict broke out in October, the Houthis have increased the number of attacks on ships in the Red Sea, a major international shipping route.
The attack affected trade flows as tight supplies put upward pressure on inflation globally.
Oil prices rose more than 4% before paring gains as Brent crude rose above $80 a barrel.
Rising oil prices could raise concerns about a new spike in inflation and complicate the central bank's efforts to cut interest rates.
The Labor Department said Monday that lower energy prices in December led to a decline in the producer price index for the month. The index linked to so-called “final demand goods” fell 0.4% from the previous month. We see that almost 60% of this decline is due to his 1.2% fall in energy prices. A sustained rise in energy prices due to the Red Sea dispute could mean higher producer price inflation in January.
