Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

MidEast Energy Alert: Why the Crisis in Yemen Could Get Ugly Very Fast

Commodities / Energy Resources Mar 26, 2015 - 07:40 PM GMT

By: Money_Morning

Commodities

Dr. Kent Moors writes: The last 24 hours have provided a stark reminder of the immediate impact geopolitical events can have on oil prices.

This time there’s a crisis in Yemen, and it’s about to take a turn for the worse.

As a result, I’ve been asked to provide my analysis on CNBC’s Closing Bell at 4:10 p.m. today to discuss the impact the crisis will have on oil prices.


But, as always, I wanted to give you a quick heads-up on what I am going to say and the rationale behind it.

This crisis is already having a big impact on the price of crude…

Oil Jumps as Yemen Burns

By mid-morning today, West Texas Intermediate (WTI) was up over 6% in less than 18 hours. Meanwhile Brent was up more than 5%, and was showing signs that it might be accelerating.

Behind this dramatic jump in price is the initiation of air strikes against Houthis rebels in Yemen by Saudi-led coalition forces.

As reported by Saudi-owned Al-Arabiya TV, the coalition includes the UAE, Bahrain, Kuwait, Qatar, Jordan, Morocco, and Sudan sending aircraft, while Egypt, Jordan, Sudan, and Pakistan were ready to take part in any ground offensive. As part of the offensive, the U.S. was providing “logistical and intelligence support.”

Some of these airstrikes are being directed at the Al Anad air base, which was captured by rebels earlier yesterday. Until a few months ago, this was the base the U.S. used to launch counter-terrorism operations in the region, especially against ISIS in Iraq.

But how quickly things have changed since then…

As it stands, the immediate impact on oil trading routes is minimal. Yemen is located at the southwestern tip of the Arabian Peninsula at the entrance to the Red Sea, and a short boat ride from the Horn of Africa (hardly a stable place itself these days).

Given its location, little direct oil traffic moves north from here. The primary Saudi East-West Petroline oil pipeline connects to Yanbu on the coast well north of Yemen. About 5 million barrels a day travel via that route.

As you can see, the Saudis do have an extensive border with Yemen, and they have been moving troops to points along the border over the past few days, leading to speculation that ground forces may be next. The Yemeni port of Aden is currently under siege, and the current president is either in hiding or has already left the country.

Following the Arab Spring two years ago, Abdu Rabbu Mansour Hadi took over the presidency from long-time strongman Ali Abdullah Saleh. Saleh has the support of the Houthis, and they now control most of the country’s military, including the air force.

That makes the U.S. and regional response much more difficult. In fact, the situation has all the hallmarks of a bloodbath just waiting to happen.

Dangerous Times Ahead

This is the fourth country in the area to unravel since the first Arab Spring unfolded – after Syria, Libya, and the ISIS insurgency in Iraq.

But this one is very different and far more deadly. The makeup of the parties involved is the real concern rattling the oil markets, not the direct impact of the crisis on current oil trading routes.

With the exception of events in the tiny country of Bahrain, the first Arab Spring was able to avoid the powder keg issue.

But not this time.

The besieged government in Sana’a, the Yemeni capital, is Sunni. The Houthis are Shiite, and strongly supported by Iran. The airstrikes yesterday have sunk Saudi-Iranian relations to their worst levels in decades.

Tehran has since condemned the attacks as an invasion, and promise all the help necessary to repel it. Ground troops that have amassed on the Saudi side of the border are likely to cross over into Yemen shortly.

As a result, I would not expect any further progress in the 5+1 nuclear talk with Iran from this point forward either.

Unless Iran moves to block the Strait of Hormuz in reprisal to the Saudi strikes, a reaction that would affect 20% of global crude oil exports and immediately bring in the U.S. fleet, oil prices should begin to recede a bit.

But that reprieve may not last very long.

As I have noted several times over the past month, the Arab Spring II will be much nastier than the first round of uprisings, especially if the Sunni-Shiite division becomes a central issue.

Keep in mind that countries in the region essentially bought off the opposition two years ago with massive additions to social welfare programs and government grants. All of them were funded when oil prices were much higher.

They do not have that luxury this time.

Again, be sure to tune into CNBC today at 4:10 to get all of the most current details. This could get ugly fast.

Source :http://oilandenergyinvestor.com/2015/03/why-the-crisis-in-yemen-could-get-ugly-very-fast/

Money Morning/The Money Map Report

©2015 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in