Title: US and UK air strikes on Houthi armed forces in Yemen cause spike in international oil prices
A new round of conflict between the Palestinian Islamic Resistance Movement (Hamas) and Israel has continued for a full 100 days. In response, the US and UK have carried out air strikes on multiple facilities of the Houthi armed forces in the Yemeni capital of Sanaa, the western Red Sea city of Hodeidah, and the northern Saada province. These attacks have led to an increase in international oil prices, which has raised concerns about the Middle East’s geopolitical situation.
The air strikes, launched on January 12th and 13th, have prompted market concerns about the situation in the Middle East to become more intense. As a result, international oil prices have risen sharply during the European trading session. The main U.S. oil and Brent oil contracts saw intraday gains exceeding 4%, with Brent oil touching the $80 per barrel mark at one point.
Minsheng Securities predicts that the increased instability of crude oil supply will drive more volatility in oil prices. They also forecast that state-owned oil companies’ valuations are expected to increase. In particular, the valuation of central oil enterprises, including China National Offshore Oil Corporation (00883), China National Petroleum Corporation (00857), China Petrochemical Corporation (00386), and China National Petroleum Corporation (00702), is expected to rise due to the rise in international oil prices.
However, analysts from CITIC Futures issued a warning that market concerns about the outbreak of a wider conflict have boosted oil prices. They also emphasized that the situation in the Middle East remains full of uncertainty, and the current demand pattern for crude oil has not seen any fundamental change. Therefore, they advised investors to approach oil prices with a volatile mindset.
The ongoing tension in the Middle East and the recent US and UK air strikes on Houthi armed forces in Yemen, as well as other geopolitical factors, have created significant support for oil prices. As a result, concerns over a wider conflict have driven market uncertainty and increased oil prices. The situation in the Middle East remains precarious, which will continue to influence the volatility of oil prices in the days and weeks ahead.