Houthi Control of Mokka Threatens Global Trade as Oil and Gas Prices Surge
The conflict in the Middle East continues to escalate, and its impact on global trade is becoming increasingly apparent. The Yemeni city of Mokka has fallen into the hands of Houthi rebels, who are now advancing towards Bab el-Mandeb, a strategic waterway connecting the Red Sea with the Indian Ocean.
Bab el-Mandeb is a crucial chokepoint for international shipping, and its control could have significant implications for global trade. The strait's importance is on par with that of the Strait of Hormuz, another vital passage in the region. By controlling Mokka, the Houthis will be able to target and block international shipping more effectively.
The conflict is also affecting oil production, with Saudi Arabia reporting a decrease in its oil output over the past month to its lowest level since 1990. As a result, oil prices are rising, with Brent oil reaching $105.72 per barrel on Thursday. The price of US WTI oil increased to $100.39 per barrel.
The violence in the Middle East has also driven up European gas prices, which have more than doubled since the outbreak of war. At the benchmark TTF futures market in Amsterdam, the European gas price stood at around €81.50 per megawatt-hour on Thursday, a 2.5% increase from Wednesday's levels.
The renewed rise in gas prices poses significant challenges for Europe, particularly as storage levels are currently only 67% full ahead of winter. In Germany, the figure is even lower at just 55%. The uncertainty stemming from the conflict has delayed the accumulation of gas reserves.