The price of oil has shot higher in Asia as Saudi Arabia and its allies began bombing targets in Yemen. Brent crude almost hit 60 and WTI smashed resistance around 50.00 and briefly hit 52.00, but both began to pullback late in the Asia session. Initially, the market was concerned about possible supply disruptions and the possibility of the conflict spreading throughout the Middle East, but some of these fears were eased when Asian importers stated that they aren’t yet concerned about supply disruptions.
Nonetheless, the bombing of Yemen is going to increase tensions with Iran; while Yemen isn’t a major producer of oil, the prospect of full-blown war between the Sunnies and Shi’ites, however remote at this stage, is concerning. Also, Saudi Arabia is the world’s largest oil exporter, thus it’s understandable why the market got a little spooked. It’ll be interesting to see how European markets handle this news, as the world’s major producers in the region send oil past Yemen’s coastline to get to Europe, thus importers there may be more affected than those in Asia.
Brent crude (white) and WTI
Source: FOREX.com, Bloomberg (note: this is a Bloomberg chart and may not represent the prices offered by FOREX.com)