Strong tensions on the oil market, the barrel flirts again with 80 dollars

(Boursier.com) — The barrel of oil is soaring against a backdrop of persistent tensions in the Middle East. The barrel of Brent for March delivery is currently climbing 3% to $79.8 in London while the West Texas Intermediate contract (due in February) is up 3.2% to $74.4. The United States and its allies have launched airstrikes against Houthi rebels in Yemen, in retaliation for attacks on Western ships in the Red Sea. President Joe Biden said strikes had been carried out against a number of targets used by the Iran-backed group, with US officials saying radar sites and missile launchers had been hit, ‘Bloomberg’ points out.

The Houthis have fired missiles at ships almost daily over the past two months and have vowed not to let up the pressure until Israel ends its attack on Gaza. The attacks have disrupted international trade on a key route between Europe and Asia, which accounts for around 15% of global maritime traffic. Shipping giant Maersk and others are diverting their ships from the Red Sea, warning customers of further disruption. “The Gulf of Oman is very close to the Strait of Hormuz, a critical bottleneck for oil flows. More than 20 million barrels/day of oil passes through the Strait of Hormuz, which is equivalent to approximately 20 % of global consumption”, specify ING analysts.

The main risk to prices concerns Iran and its potential direct involvement in the conflict, which could threaten oil supplies to a region that produces a third of the world’s crude. President Biden has left open the possibility of additional measures against the Houthis. “I will not hesitate to take additional measures to protect our people and the free flow of international trade if necessary,” he said. Iran, for its part, condemned the American-British strikes, the Ministry of Foreign Affairs affirming that they would only fuel insecurity and instability in the region, the Houthis having also affirmed that they would not would not leave you intimidated.

“The fear in the oil market is that the region is heading towards an unpredictable escalation, where at some point the oil supply will actually end up being lost,” Bjarne Schieldrop, commodities analyst at SEB, told ‘Bloomberg’. “If a large part of the Strait of Hormuz flows were to be disrupted, the impact on gas markets would be up to three times that of the oil shocks of the 1970s and more than twice that of war in Ukraine, which would undermine already fragile supply chains and inventory levels,” said Saul Kavonic, analyst at MST Marquee.