Oil prices jumped on Friday after the US and UK struck Houthi targets in Yemen and Iran seized a tanker in the Gulf of Oman, stoking fears of an escalation in geopolitical tensions that could threaten trade and oil flows.
Brent, the benchmark for two thirds of the world’s oil, was trading 2.05 per cent higher at $79.02 a barrel at 10.06am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 2.15 per cent at $73.53 a barrel.
“Both contracts are trading stronger in early trade today in response to escalating geopolitical tensions from the Middle East and Red Sea region,” said Edward Bell, head of market economics at Emirates NBD.
“The US and its allies launched missile attacks on militant sites in Yemen that have been threatening Red Sea shipping.”
The benchmarks are adding to a nearly 1 per cent gain they recorded on Thursday, putting crude prices on track for the second consecutive weekly gain.
Iran seized a tanker off the coast of Oman on Thursday, further increasing regional tensions.
The vessel was “an American oil tanker” that was “stolen by the US and changed its name”, Iran’s official Islamic Republic News Agency reported.
Geopolitical tensions in the Middle East have been a key driver of oil price movement since early October.
But attacks by the Iran-backed Houthis on ships in the Red Sea that disrupted trade and the flow of fuel, have escalated the situation in recent weeks.
The US and UK launched air strikes against the Houthis on Friday, in response to the escalating Red Sea attacks. The rebel group has been firing missiles at ships for the past two months to retaliate against Israel’s assault in Gaza.
The Houthis this week launched their biggest co-ordinated attack in the Red Sea despite the presence of a US-led naval force.
The air strikes on Houthi military positions are expected to diminish the group’s capabilities, a senior US administration official said on Thursday.
United Arab Emirates Dirham Exchange Rate
