Oil price surges on Yemen military action



Oil prices surged by more than 4 per cent on Thursday as Saudi military action on Yemen stoked fears of disruption to global supplies.

Brent crude was trading at about US$58 a barrel by late afternoon UAE time, its highest level in more than two weeks.

Saudi Arabia carried out air strikes against Houthi rebels in the Yemeni capital Sanaa on Wednesday after five GCC states said they would answer calls from Yemen’s beleaguered president, Abdrabu Mansur Hadi, for intervention in the country.

Mr Hadi fled his stronghold in the southern city of Aden for an undisclosed location on Wednesday, after the arrest of the defence minister, Mahmud Al Subaihi, by the Houthis.

However, the impact of the events in Yemen on oil prices was likely to be short lived, according to Tom Pugh, a commodities economist with Capital Economics.

“The Saudi actions really spooked the market this morning, but it’s unlikely to impact prices too much going forward,” he said.

“I wouldn’t be surprised if prices dropped back down in the coming days.”

The rise in oil prices helped to bolster Arabian Gulf stock markets, which shrugged off sharp falls at the start of trading to end little changed.

Saudi Arabia’s stock market, which recorded its largest one-day fall since mid-December on Wednesday, fell by more than 4 per cent in the opening minutes of trading, but rallied to close up 0.4 per cent.

In the UAE, the Dubai Financial Market General Index plunged 6 per cent at the open, before closing down just 0.8 per cent at 3,407.25. “Loads of stocks hit their lower limits in early trading, but there are a still a number of investors who believe that the outside involvement in Yemen will be short lived,” said Khaldoun Jaradat, a trading manager at Brokerage House Securities.

“These people, including foreign investors, bought back into stocks, taking advantages of the cheaper prices.”

The Abu Dhabi Securities Exchange General Index was little changed, closing up 0.03 per cent at 4,373.13.

jeverington@thenational.ae

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Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more

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