Crude oil prices rise after US, UK attack Houthis
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Crude oil prices were up more than 2.5 per cent on Friday after the US and the UK launched joint strikes on Houthi targets in Yemen, media reports said.
So far this year, Brent crude, the global oil benchmark, has risen 3.1 per cent.
The global economy has been served a series of painful reminders of the importance of disruption in the Red Sea, through which 12 per cent of global trade flows, including 30 per cent of global container traffic, CNN reported,
The Houthis attack is forcing ships to take a far longer route around Africa and can cause insurance costs to rocket. Companies can pass on the increased cost of moving their goods to consumers, raising prices again at a time when governments around the world have struggled to tame post-pandemic inflation.
"There are concerns that the current chaos can last for many months, which will be a huge headache for companies around the world," Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, said, CNN reported.
"With ships heading from Asia to Europe being re-routed around the South of Africa, it is taking, on average, an extra 10 days, and costs per ship are going up by $1 million dollars, due to the delays and higher fuel bills," she said.
She said that the risk is that supply chains are tightening up around the globe, increasing the risk of bottle necks which can once again fuel inflation.
