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U.S., UK strikes on Houthi: Oil prices hit 4% rise after Red Sea escalation

U.S., UK strikes on Houthi: Oil prices hit 4% rise after Red Sea escalation Oil prices hit 4% rise after Red Sea escalation (Getty Images)

The price of oil went up by 4% today because oil tankers changed their routes away from the Red Sea. The United States and the United Kingdom had attacked Houthi targets in Yemen overnight after the Iran-backed group targeted ships, according to Reuters and BBC.

Brent crude futures went up by $3.16, reaching $80.57 a barrel. U.S. West Texas Intermediate crude futures rose by $3.05, reaching $75.07. This is the second week in a row that these oil prices are increasing.

The airstrikes by the U.S. and UK raised concerns about the Israel-Hamas conflict spreading across the Middle East. This could affect oil supplies, especially through the vital Strait of Hormuz.

According to experts, if the flow through the Strait of Hormuz is stopped, it could have a significant impact on oil prices and global supply chains. Over 20 million barrels of oil pass through the Strait of Hormuz every day, which is about 20% of the world's oil consumption.

"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," believes an energy analyst Saul Kavonic.

U.S., UK strike after Houthi attacks

The Houthis targeted commercial vessels in the Red Sea over the past few months in support of the Palestinian group Hamas in its war against Israel. Shipping companies like Maersk were diverting vessels away from the Red Sea due to the disruptions.

Last night, the United States and the United Kingdom launched powerful strikes against Houthi targets in Yemen. This was in response to sustained Houthi attacks on shipping lanes.

U.S. President Joe Biden said the strikes in Yemen were a message that the U.S. would not tolerate attacks on its people or threats to navigation. UK Prime Minister Rishi Sunak said that the attacks had caused "major disruption to a vital trade route and (higher) commodity prices". The Houthi group in Yemen stated they would continue targeting ships going towards Israel.

Read more about the escalations in the Red Sea region in the article by RBC-Ukraine.