Oil prices jumped by 4% as oil tankers were redirected from the Red Sea following overnight aerial and naval strikes by the United States and Britain on Houthi targets in Yemen. This action was taken in response to the group's attacks that have been occurring since late last year.
Brent crude futures leaped by $3.16, or 4.1%, to $80.57 a barrel, while West Texas Intermediate (WTI), the American standard, climbed $3.05, or 4.2%, reaching $75.07. Both benchmarks are on track for a second consecutive week of gains.
The American and British strikes represent one of the most dramatic indicators to date of the expanding scope of the war between Israel and the Islamic Resistance Movement, Hamas, in the Middle East since its onset on October 7, impacting oil supplies from the region, particularly those moving through the vital Strait of Hormuz.
Analysts at ING noted in a memo that over 20 million barrels of oil per day, which equates to around 20% of global consumption, transit through the Strait of Hormuz.
President Joe Biden said that these precise strikes serve as a clear message that the United States and its allies will not stand by idly in the face of attacks against individuals, nor will they allow "hostile entities to endanger the freedom of navigation." He added that nations including Australia, Bahrain, Canada, and the Netherlands supported the operation.
The US-led attacks followed Iran's seizure of a tanker carrying Iraqi oil bound for Turkey on Thursday, in retaliation for the US's confiscation of oil carried by the same tanker last year.
Oil prices had already risen about 1% on Thursday following the Iranian seizure, amid concerns about the potential escalation of conflict in the Middle East.
The Houthis in Yemen carried out their largest attacks so far this week on commercial shipping lines in the Red Sea.
The Houthi attacks in the Red Sea have disrupted global trade on a route between Europe and Asia that witnesses roughly 15% of the global shipping traffic.
Global trade fell by 1.3% from November to December 2023, as armed assaults on commercial vessels in the Red Sea led to a decrease in the volume of goods transported in the region.
The shipping giant Maersk, among other companies, is rerouting its ships away from the Red Sea, warning clients of further disruptions.
