Oil prices spike as Saudi Arabia halts shipments after attack

27 July, 2018, 21:45 | Author: Natasha Holloway
  • Iran-backed Houthis hit Saudi oil tanker off Yemen coast

"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", the Energy Minister's statement said.

It still can use its East-West mega-pipeline to ship crude from its oil fields in the Arabian Gulf into Yanbu, bypassing the strait and keeping the European market within regular reach.

It sent 600,000 barrels a day of crude from the Persian Gulf to buyers in Europe and North America this year, according to tanker tracking data compiled by Bloomberg.

Badr al-Khashti, chairman of Kuwait Oil Tanker Company (KOTC), said: "All options are possible but there is nothing confirmed so far".

Brent crude oil futures rose 0.6% to $US74.35 per barrel on Thursday at 6 48 GMT and USA oil reserves fell to a three and a half year low, Reuters reported. The statement said nobody was injured and the damage posed no threat to the environment.

"Fortunately, there were no injuries or oil spill that would have resulted in catastrophic environmental damage".

According to reports, the two-million-barrel capacity Saudi tankers were hit on Wednesday, causing minimal damage to one.

One of the coalition's main justifications for intervening in Yemen was to protect shipping routes such as the Red Sea.

How important is Bab el-Mandeb to Saudi Arabia?

Dubai: Saudi Arabia´s halt to oil shipments through a strategic waterway after Yemeni rebel attacks could provoke an worldwide intervention in Yemen´s "forgotten" war, analysts say.

They accuse Iran of supplying the Houthis with weapons including missiles, which the group and Tehran deny.

The United Nations fears cutting off Hodeidah, a lifeline for millions of Yemenis, risks triggering a starvation in the impoverished country.

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The latest attack on Saudi oil tankers could strengthen the Arab states' position ahead of possible United Nations -sponsored peace talks between Yemen's warring parties, which aim to avoid an all-out assault on the country's main port city of Hodeidah.

Following the attack, the Saudi coalition said the rebels "had nearly caused an environmental disaster", according to the state-run al-Ekhbariya TV channel.

"I think the market's a little complacent", [Rapidan Group founder and president Bob McNally] told cnbc, referring to the lack of movement in oil prices following the exchange of threats between Rouhani and Donald Trump.

This attack underscores the risk of an escalation in tensions in the region.

Saudi Arabia said it was "temporarily halting" all oil shipments after an attack on two oil tankers by Yemen's Iran-aligned Houthi movement.

In June 2016, the country's former president Jacob Zuma traveled to Saudi Arabia to launch the Al-Kharj (Military Industries Corporation) facility in Riyadh, together with the Saudi Crown Prince Mohammed bin Salman.

Oil expert Kamel al-Harbi said in an interview with Al Arabiya news channel that the importance of Bab al-Mandeb is that it save time and cost.

The coalition has carried out a campaign of thousands of air strikes and restricted imports into Yemen, worsening what the United Nations says is potentially the world's worst humanitarian crisis.

The UN World Food Programme said four in every 10 children under five were now acutely malnourished, and put the number of people displaced since the Hodeidah offensive began at 200,000.

James Dorsey, an expert on Middle East affairs, said the attacks on oil tankers would draw global attention to Yemen.

Shortages in the market have already been forecast, but these were all centered around the prospect of Iran sanctions.

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