Monday, 10 December, 2018

Oil prices climb as Iran-backed Houthi rebels attack Saudi Arabian tankers

Iran-backed Houthis hit Saudi oil tanker off Yemen coast Saudis halt oil shipments through waterway after Yemen rebel attack
Cristina Norman | 27 July, 2018, 21:42

"Saudi Arabia, the world's biggest oil exporter, said on Thursday that it was "temporarily halting" all oil shipments through the strategic Red Sea shipping lane of Bab al-Mandeb after an attack on two big oil tankers by Yemen's Iran-aligned Houthi movement", said Reuters.

According to the US Energy Information Administration, an estimated 4.8 mln bpd of crude oil and refined petroleum products flowed through Bab al-Mandeb waterway in 2016, around 2.8 mln barrels went north towards Europe, while the other two million barrels went from Europe towards the Middle East and Asia.

Khalid al-Falih, the Saudi energy minister said in a statement that the two oil tankers, each carrying two million barrels of oil, had been attacked and one sustained minimal damage.

The statement underscored the steps being taken by the legitimate government in cooperation with the Arab Coalition, led by the Kingdom of Saudi Arabia, to protect the western coast of Yemen and Yemen in general from the danger of the terrorist militias, which unequivocally proved to be a real threat, not only to Yemen, but also to the worldwide peace and security.

It was not clear if a Saudi-led military coalition would take additional security measures or impose further restrictions on imports to Yemen, which is struggling with the world's most urgent humanitarian crisis.

The Yemeni government has strongly condemned Houthis' attack on two Saudi oil tankers in the Red Sea, Saudi Press Agency (SPA) said Thursday night.

"The Saudi halt will cause prices to increase slightly and for a limited period", Kuwaiti oil expert Kamel al-Harami said.

In a statement carried by the Yemeni news agency, the government said the incident is a terrorist act aiming to harm the vital interests of Yemen and the freedom of worldwide navigation.

Responding to USA threats to bring Iran's oil exports to a halt, Rouhani warned the United States on July 22 "not to play with the lion's tail", saying the US would regret the consequences including "the closure of many straits".

The Saudi-led coalition has repeatedly raised alarm that Huthi rebels threaten vessels in the Red Sea through their control of the strategic Hodeida port.

Saudi Arabia has suspended oil shipments through the Bab al-Mandeb Strait pending an assessment of the security situation in the area.

Although Saudi Arabia exports most of its crude through the Strait of Hormuz, the militia attack is significant because it adds to the risks of using this key artery.

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.

"Thankfully the attack failed due to immediate intervention of the coalition's fleet", it said without providing details.

"The market is very calm as it tries to assess the impact from the President Trump deal with the European Union to hold off on tariffs", said Phil Flynn, analyst at Price Futures Group in Chicago. The EIA estimates that in 2016 - the previous year for which it published data - 4.8 million barrels a day of crude and petroleum products flowed through the strait, with about 2.8 million going north toward Europe, and another 2 million moving in the opposite direction.

"[But] we were taking into consideration to keep the navigation through Bab al-Mandeb safe, and to not provide the aggression forces an excuse that the waterway is under threat", the Houthi leader said in a post on Twitter.

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

The latest attack on Saudi oil tankers could strengthen Riyadh and Abu Dhabi's position ahead of possible UN-sponsored peace talks between Yemen's warring parties, which aims to avoid an all-out assault on the country's main port city of Hodeidah.

"The halt of oil shipments could provoke an escalation of the conflict with external powers intervening in a bid to assist Saudi Arabia".

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