Yemen Conflict Sends Oil Prices Soaring Amid Houthi Takeover
The conflict in Yemen between Iran-backed Houthi fighters and Saudi-backed forces has escalated, leading to concerns that oil prices could rise even higher. The Houthis have taken control of the port city of Mokha, just north of the Bab el-Mandeb waterway, a key shipping route for oil exports.
The fighting in Yemen coincided with an exchange of fire between the US and Iran in the Persian Gulf, causing Brent crude prices to surge to nearly $110 a barrel. Capital Economics warns that the increased risk of energy price hikes could continue in the coming weeks.
Saudi Arabia's oil exports have been severely impacted by the Houthi attacks, with data from Kpler showing that the country exported just 3.2 million barrels per day last month, its lowest level in over a decade. The Saudi Energy Ministry reported that the Houthis struck Saudi oil facilities on Tuesday, sparking fires and halting operations.
The conflict has led to growing budget deficits for Gulf Arab producers like Saudi Arabia, which still face attacks on ships in the Strait of Hormuz. As a result, countries around the world are relying on emergency oil reserves, driving up prices even further.