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World oil prices rise on Red Sea escalation

AFP

Oil prices climbed after United States and United Kingdom forces launched strikes against Iran-backed Huthi rebels, while global stocks were mixed following the kickoff of corporate earnings season.

Crude prices spiked more than four percent Friday before ebbing somewhat after the allies launched deadly strikes following weeks of disruptive rebel attacks on Red Sea shipping.

“The fear in the oil market is that the region is on an unpredictable escalating path, where at some point down the road, supply of oil will indeed in the end be lost,” noted Bjarne Schieldrop, chief commodities analyst at SEB bank.

He noted that if the US-UK attacks were unsuccessful in destroying Huthi weapons, and oil tankers need to go around Africa, then up to 80 million barrels will be locked in transit – sending prices up as much as $5-10 per barrel.

The Huthis have carried out a growing number of strikes on vessels in the Red Sea, a key international shipping route, since the Gaza war erupted in October.

The attacks have affected trade flows at a time when supply strains are putting upward pressure on inflation globally.

Electric car manufacturer Tesla earlier announced it is suspending most production at its factory in Germany for two weeks, citing a shortage of parts due to shipping delays caused by Huthi rebel attacks in the Red Sea.

The Red Sea attacks had led to delays that created a “gap in the supply chains,” resulting in production at the facility southeast of Berlin being suspended “with the exception of a few sectors,” Tesla said in a statement.

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