Saudi Arabia Airstrikes: Oil Prices Soar After Military Operations Begin Against Houthi Rebels In Yemen

Benchmark Brent crude oil prices surged nearly 6 percent on Thursday after Saudi Arabia launched airstrikes against Houthi rebels in Yemen late Wednesday. The Shiite rebels and their allies have forced President Abed Rabbo Mansour Hadi to flee Yemen's capital Sanaa, raising further concerns about the security of oil shipments from the Middle East.

Brent crude oil futures soared to $59.71 a barrel, up nearly 6 percent since their last settlement, before dropping back to $57.80 a barrel at 4:02 a.m. GMT (11:02 p.m. EDT, Wednesday). U.S. crude was up $1.64 at $50.85 a barrel, Reuters reported, adding that oil prices shot up as traders and importers worried about fighting in the oil-rich Middle East getting out of control. However, not everyone sounded overtly concerned about the long-term impact on oil from the fresh escalation of the conflict.

“Just because Saudi and others conducted air strikes doesn't mean the oil market becomes suddenly tight,” Masaki Suematsu, manager of the energy team at brokerage Newedge Japan in Tokyo, told Reuters.

Although the Middle East is the world’s biggest exporter of liquefied natural gas through Qatar and Yemen, Asian importers said they were not immediately worried about supply being affected.

“Gas supply from Yemen has no disruption so far,” Lee Sang-wook, spokesman at state-run Korea Gas Corp, told Reuters. “We are not concerned given the supply surplus and weak demand currently.”

Houthi rebels, who now control most of the Yemeni military with assistance from ousted former president Ali Abdullah Saleh, are believed by Saudi Arabia and its Gulf allies to be tools of Iran. However, the Houthis deny they are supported by Iran, the Associated Press reported.

In an indication of the seriousness of the deteriorating situation in Yemen, U.S. President Barack Obama authorized the American government to provide logistical and intelligence support to Saudi military operations in Yemen.

“While U.S. forces are not taking direct military action in Yemen in support of this effort, we are establishing a Joint Planning Cell with Saudi Arabia to coordinate U.S. military and intelligence support,” the White House said in a statement on Wednesday.