The Houthi rebels continue firing rockets at ships passing through the Red Sea, sending oil prices on an upward spiral.
Oil prices approach the $80 per barrel mark as geopolitical tensions in the Middle East and the Red Sea escalate. The Houthi rebels in Yemen continue to target shipments en route to Israel, with the US scrambling forces to secure the region.
On the first session of 2024, Brent (the world’s benchmark for oil prices) rose $1.72 to $78.76. West Texas Intermediate (a similar benchmark for the US) also increased $1.57 to $73.22.
Oil prices have been fluctuating for months, averaging $82.17 per barrel in 2023. At some point, analysts were worried that oil prices might pierce the $100 or even $150 level.
Similar fears preceded Hamas’ attack on Israel on October 7th, which sparked a further increase in oil prices. Previously, Russia, Saudi Arabia, and other OPEC countries were colluding to decrease oil production, artificially increasing prices for net buyers in the West.
The United States also witnessed a similar increase in oil prices, even though it produces most of its oil domestically or imports it from neighboring Canada.
Who are the Houthi Rebels
The Houthis are a rebel militia backed by Iran and currently holding the capital of Yemen. The Yemenese civil war is one of the bloodiest conflicts of the XXI century and is still ongoing although with less intensity.
Saudi Arabia, the richest and most powerful player in the region, is also at war with the Houthis, being backed by the Saudi’s archenemy: Iran.
Being backed by Iran, these rebels are staunchly anti-Israel and pro-Palestine. They have fired several rockets against Tel Aviv and other Israeli cities since October 7th. Most of these rockets, however, have been intercepted by American forces deployed in the region.
Indeed, after the crisis broke out, the United States immediately sent two carrier task forces, currently deployed in the Mediterranean and the Persian Gulf.
Crucially, the Houthi Rebels control the Bab El Mandeb Strait, one of the two entrances into the Red Sea (the other being the Suez Canal). Most of the world’s trade passes through these two straits, allowing the Houthis to disrupt global trade at their will.
In recent weeks, the Houthis have been firing rockets at shipments en route to Israel. The United States tried responding with an international coalition to protect these waters, but European players like France, Spain, and Italy declined the call.
At the moment, oil and diesel shipping have already started making the whole route around Africa, avoiding the Red Sea and the Bab El Mandeb Strait. This increases shipping times and worsens the already severe energy crisis in Europe.
