(MENAFN- Arab Times) KUWAIT CITY March 26 (AFP): The oil price surge after Saudi jets bombed Yemeni rebels will be 'short-lived' as the market is well-supplied and a full-blown conflict with Iran is unlikely analysts said Thursday. Oil prices jumped more than five percent in Asia Thursday after Saudi and Gulf airstrikes hit targets of pro-Iran Houthi rebels triggering fears of a massive confrontation in a region that pumps a quarter of the world's 92 million barrels per day (bpd) of crude supplies.
'This is just a short-lived surge and a temporary reaction to the airstrikes mostly driven by speculators' Kuwaiti oil analyst Kamel al-Harami said. 'The oil market is super-saturated there are 2-3 million bpd of extra supplies US inventories are full and the likelihood of a major disruption is highly remote' Harami told AFP. He said Iran is at a critical stage of negotiations with Western powers over its controversial nuclear programme and is eagerly looking to lift crippling sanctions. Sanctions 'The Iranians are ready to do anything to see the sanctions lifted. That's why they will not attempt to close the Hormuz Straits' said Harami. The Gulf Cooperation Council (GCC) states Bahrain Kuwait Oman Qatar Saudi Arabia and United Arab Emirates together pump around 17.5 million bpd. Iran and Iraq two key producers of oil cartel OPEC raise the region's total production to around 23 million bpd or 25 percent of global supplies. Most of GCC Iran and Iraq oil exports pass through the strategic Hormuz Straits off Iranian and Omani shores to Asian markets. The Islamic republic has many times threatened to close the straits but never did. Yemen itself is a small oil producer accounting for a fraction of global output and cannot affect oil prices but it borders Saudi Arabia the world's top crude exporter and impacts other Gulf markets. 'The geopolitical tensions in Yemen are pushing prices higher' Daniel Ang an investment analyst with Phillip Futures in Singapore told AFP. 'Yemen is not a big producer but it is a trade hub in the region so tensions over there could cause a disruption in the trading activities for energy products.' Controls Yemen controls the strategic Bab al-Mandab strait a vital corridor through which 40 percent of the world's maritime trade passes. Though little oil is exported through Bab al-Mandab it is extremely vital for trade as it links with the Suez canal through the Red Sea. 'Oil prices rose partly over fears of a threat to close Bab al-Mandab or the Hurmoz straits thus disrupting oil supplies' Saudi economist Abdulwahab Abu-Dahesh said. 'But I don't think the war will expand and the straits will be closed. We had seen much bigger wars in the past Iran-Iraq war US-led liberation of Kuwait and others without the two straits being shut' Abu-Dahesh told AFP. 'I think there will be no war with Iran and oil prices will continue to hover around $60 a barrel' he said. The turmoil has overshadowed the effect of rising US crude supplies which added another 8.2 million barrels in the week ending March 20. World oil prices have collapsed by about 60 percent since June with strong US production exacerbating elevated output by the Organisation of Petroleum Exporting Companies.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.