LONDON – Oil prices climbed about 3% on Friday, as some tankers diverted course from the Red Sea following overnight air and sea strikes by the United States and Britain on Houthi targets in Yemen after attacks on shipping by the Iran-backed group.
Witnesses in Yemen confirmed explosions throughout the country.
futures were up $2.21, or 2.9%, at $79.62 a barrel at 1350 GMT, while U.S. West Texas Intermediate crude futures climbed $2.13, or 3%, to $74.15.
Both benchmarks were on course for a second straight weekly rise.
The U.S. and UK strikes come in retaliation for Houthi attacks since October on commercial vessels in the Red Sea, concentrated on the Bab al-Mandab Strait to the southwest of the Arabian Peninsula, in a show of support for Palestinian militant group Hamas in its fight against Israel.
The escalation has fuelled market concerns about the Israel-Hamas war widening into a broader conflict in the Middle East affecting oil supplies from the region.
That includes the important Strait of Hormuz, on the opposite side of the Arabian Peninsula, between Oman and Iran. Iran seized on Thursday a tanker carrying Iraqi crude south of the strait destined for Turkey.
“If a large part of Strait of Hormuz flows were to be halted, it would present up to three times the impact of the 1970s oil price shocks and over double the impact of the Ukraine war on gas markets, atop already fragile supply chains and stock levels,” said Saul Kavonic, an energy analyst at MST Marquee.
ING analysts in a note said more than 20 million barrels per day of oil move through the Strait of Hormuz, equivalent to around 20% of global consumption.
U.S. President Joe Biden said the “targeted strikes” in Yemen were a clear message that the United States and its partners will not tolerate attacks on its personnel or “allow hostile actors to imperil freedom of navigation”.
A Houthis spokesperson said the group would continue to target shipping heading towards Israel.
Saudi Arabia, a top oil exporter and regional power, called for restraint and “avoiding escalation” and said it was monitoring the situation with great concern.
Attacks by the Houthis in the Red Sea have disrupted international commerce on a route between Europe and Asia which accounts for about 15% of the world’s shipping traffic.
Shipping giant Maersk and others are diverting vessels away from the Red Sea, warning customers of further disruptions.