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March 25, 2015

Oil prices increase after Saudi Arabia military operation in Yemen

The price of Brent crude oil increased over 4% towards $59 a barrel on Thursday after Saudi Arabia and its Gulf Arab allies started a military operation in Yemen.

By admin-demo

The price of Brent crude oil increased by over 4% towards $59 a barrel on Thursday, after Saudi Arabia and its Gulf Arab allies started a military operation in Yemen.

Reuters reported that Brent futures rose by $2.27 to $58.75, and US crude was up $2.03 at $51.24 a barrel.

The military operations, including air strikes, against Iran-backed Houthi rebels may stir concerns on the security of oil shipments from the Middle East.

"The upside potential is limited unless something escalates. We need to see how this unfolds over the next couple of days."

Arab producers ship oil through the Gulf of Aden and Suez Canal to Europe.

Saxo Bank head of commodity strategy Ole Hansen was quoted by the news agency as saying: "Geopolitical risk like this has been on the back burner for a while because we’ve been focussing on global oversupply.

"This news has not made the oversupply go away. The upside potential is limited unless something escalates. We need to see how this unfolds over the next couple of days."

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The Energy Information Administration estimates that 3.8 million barrels per day of crude oil passed via Bab el-Mandeb in 2013.

Iranian news agencies reported that the country’s officials demanded Saudi Arabia and its allies immediately stop military operations in Yemen, and stated that Tehran would make all required efforts to control the crisis there.

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