Oil hits peak as Saudi resumes Yemen strikes

GMT 20:02 2015 Thursday ,23 April

Arab Today, arab today Oil hits peak as Saudi resumes Yemen strikes

Oil station
London - AFP

Global oil prices rebounded to a four-month peak Thursday as Saudi-led coalition warplanes launched new strikes in Yemen, stoking new supply concerns over the crude-rich Middle East.

Brent North Sea crude for delivery in June delivery soared to $65.13 per barrel.

The contract later stood at $64.86 in London late afternoon deals, up $2.13 from Wednesday's closing level.

US benchmark West Texas Intermediate for June meanwhile jumped $1.78 to $57.95 a barrel

"Crude oil prices rebounded to reach four-month highs following news that Saudi Arabia renewed its aerial assault in Yemen to target the Shiite rebels," said energy analyst Myrto Sokou at the Sucden brokerage in London.

"Brent front month futures rallied ... amid renewed concerns of potential disruption in oil shipping across Middle East."

The Saudi-led coalition's latest strikes in Yemen came despite a demand by rebels for a complete halt to the raids as a condition for UN-sponsored peace talks.

The regional alliance had Tuesday declared an end to the first phase of its operations against the Iran-backed Huthi rebels and their allies, but vowed to keep hitting them with targeted bombing when necessary.

"Saudi Arabia’s renewed bombing campaign in Yemen sent crude oil higher, with Brent rising to new 2015 highs," added CMC Markets analyst Jasper Lawler.

Saudi Arabia and its Arab allies launched the air war on March 26 in an attempt to restore the authority of President Abedrabbo Mansour Hadi, who was forced to flee abroad last month as the rebels swept across the country.

After the end of Operation Decisive Storm, the coalition said the campaign would enter a second phase called Operation Renewal of Hope focusing on resuming political talks, aid deliveries and "fighting terrorism".

Crude futures had fallen Wednesday after weekly US petroleum data showed higher crude inventories but marginally lower production.

US commercial crude reserves in the period ending April 17 rose for the 15th straight week, adding 5.3 million barrels, the Department of Energy said Wednesday.

It said the increase lifts US oil supplies to the highest level on record.

However, production slipped by 18,000 barrels a day, following a 20,000 barrel drop in the previous week.

"We ... remain bullish on oil and this hinges on the US crude inventories," said Daniel Ang, analyst at Phillip Futures in Singapore.

Dealers are hoping a slowdown in US shale output could alleviate a global crude oversupply, which led to a collapse in prices of more than 50 percent between June and January.

Singapore's United Overseas Bank said the oil market remained "volatile" as dealers kept close watch on the situation in Yemen.

Yemen has been gripped by turmoil since Shiite rebels launched a power takeover in Sanaa in February.

Although Yemen is not a particularly important oil producer, market watchers have been worried about the impact of the turmoil on the oil-rich region, notably in Iran, which is suspected of supporting the rebellion.

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