REUTERS/US Coast Guard
Oil prices climbed on Thursday after Saudi Arabia closed a strategic shipping lane.
The world’s largest oil producer closed the Bab al-Mandeb Strait after two large oil tankers were attacked by Iranian backed Houthi fighters with one sustaining minimal damage.
Brent crude oil futures rose 0.6% to $74.35 per barrel on Thursday at 6 48 GMT and US oil reserves fell to a three and a half year low, Reuters reported.
Oil prices were driven higher for the third consecutive day on Thursday, after Saudi Arabia closed a strategic shipping lane in the Red Sea following an attack on two of its large oil-tankers by Iranian backed Houthi fighters.
Brent crude oil futures rose 0.6% to $74.35 per barrel on Thursday at 6 48 GMT, after a gain of 0.7% on Thursday, and US oil reserves fell to a three and a half year low, Reuters reported.
US West Texas Crude futures were also up 5 cents to $69.35 to the barrel.
"The announcement this morning that the Saudis have closed some shipping lanes in the Gulf because of rebel Houthi attacks also gives the bulls something to launch off," Greg McKenna, chief market strategist at AxiTrader, told Reuters.
On Thursday Saudi Arabia said it was "temporarily halting" all oil shipments through the Bab al-Mandeb shipping lane after the two tankers were attacked, closing off a vital export channel for the world’s largest oil producer.
Khalid al-Falih, the Saudi energy minister said in a statement that the two oil tankers, each carrying two million barrels of oil, had been attacked and one sustained minimal damage.
"Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb Strait immediately until the situation becomes clearer and the maritime transit through Bab al-Mandeb is safe," said the minister.
Much of the Crude oil that leaves Saudi Arabia to the North West via the Suez Canal and the SUMED pipeline is first shipped through the Bab al-Mandeb Strait, which passes close to Yemen.
According to the US Energy Information Administration, around 4.6 million barrels of crude and refined petroleum exports per day flowed through the Strait in 2016, headed towards Europe, Asia and the United States.
The Bab al-Mandeb Strait between Yemen and Djibouti is just 20km wide, making shipping vulnerable to attack from the Houthi's in war-torn Yemen. The Iranian backed Houthi's have been fighting a Saudi-Arabian led coalition in a bloody civil war in Yemen for around three years, with the Saudi’s exports presenting a strategic target.
The latest disruption is another impact of a conflict which has cost around 50,000 lives through famine and war, which the US and UK have fueled through arms sales to the Saudi-led coalition.