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Oil prices fluctuated as West Asia war stalled but Yemen fighting escalated. Brent crude rose to $102/barrel, WTI slipped. OPEC+ held quotas.
Yemen's conflict, Houthi attacks, and low global inventories contributed to the movement. 3 Min Read Oil prices swung on Monday October 5, as traders weighed a stalled West Asia war against fresh fighting in Yemen. Brent crude for December delivery climbed above $103 a barrel in early trading, then pared its gains to trade around $102 per barrel. The contract had already gained almost 5% last week.
West Texas Intermediate bucked the trend, slipping 0.6% to $90.60 a barrel. Prices held up even though major OPEC+ producers agreed to leave their output quotas unchanged for next month. Also Read: Iraq seeks output quota increase in OPEC+ audit, says report Yemen's escalating conflict gave the market a fresh jolt.
The country's internationally recognised, Saudi-backed government launched a full-scale military campaign to retake every area the Houthis control. Rashad Al-Alimi, head of the Presidential Leadership Council, ordered all branches of the army into action on Sunday. He told the nation they would fight "until the liberation of the country from the grip of the terrorist Houthi militia".
A Saudi-led coalition that includes Yemeni forces has fought the Iran-backed group since early September, when a new Houthi offensive seized strategic ground on Yemen's western coast. That advance strengthened the group's grip on the Bab el Mandeb, which links the Red Sea to the Gulf of Aden. Saudi Arabia had used this waterway to export oil while avoiding the Strait of Hormuz.
The Houthis largely stayed out of the US-Israeli war on Iran, which began in late February. In July, however, they declared a blockade on Saudi ships, which they described as a response to a "siege" on Yemen. They have since struck the kingdom repeatedly, including its oil facilities, and so have added to the pressure on the world's biggest crude exporter.c Prices remain high even though crude flows from West Asia have almost recovered to pre-war levels.
Brent sits roughly 40% above its level when the conflict began, and the Group of Seven's pledge on Friday to release up to 100 million barrels of emergency oil and diesel stocks failed to cool it. Also Read: Rubio ordered Iranian UN delegation to leave US after talks stalled: Report Traders, however seemed to fear that the unresolved conflict could reignite at any moment, particularly as Washington attempts to increase its military footprint in the Gulf region. Iran, meanwhile, continues to attack some ships as it tries to control the Strait of Hormuz, through which 20% of the world's oil passed before the war.
Global inventories have also fallen to a five-year low.
Source: CNBC TV18
