Global oil prices continue to rise for the third consecutive week. On Thursday, October 22, they reached their highest level in almost half a year, and on Friday morning, Brent crude rose by more than 1% — to $114.47 per barrel. This was reported by Reuters.
The main reason for the price increase was the escalation of the conflict between Saudi Arabia and the Yemeni Houthis. The situation is so tense that the oil company Saudi Aramco ordered the evacuation of employees from its headquarters in Dhahran, near Bahrain.
Hostilities have also intensified in the Bab al-Mandeb Strait — one of the important sea routes used by oil tankers. Market participants fear that new attacks could disrupt oil supplies from the Middle East. These risks are pushing prices up.
Supply problems have also arisen in Libya. There, a valve on the oil pipeline, through which crude oil from the Hamada and Tahara fields flows to the Ez-Zawiya port, was shut off. As a result, production at both fields has decreased.
Analysts from ING believe that tension in the global oil market may intensify. A new round of conflict in the Persian Gulf threatens to disrupt supplies, which have so far been maintained.
However, for further oil price increases, it is not necessary for the situation to actually worsen: the mere threat of new attacks is enough to keep the market nervous.
As XS.com analyst Lin Chang notes, the further dynamics of prices will depend on the scale of possible disruptions and the speed of supply recovery. If attacks continue and tankers start to be delayed in transit, this could lead to a new increase in oil prices.
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