Crude oil prices on Monday rose beyond the $70 per barrel mark for the first time since January 2020 as a result of attack on energy facilities in Saudi Arabia by Huthi fighters from Yemen.
Brent, equivalent to Nigeria’s Bonny Light, at one point peaked at $71.38, the highest level since January 2020, before falling back under $70 per barrel.
The strike on the Aramco facilities — including one of the world’s biggest oil ports — by Yemen’s Huthi rebels Sunday followed the bombing of the country’s capital Sanaa by a Saudi-led military coalition.
The rising hostilities underscore a dangerous intensification of Yemen’s conflict between the coalition-backed Yemeni government and the Iran-backed Huthis, despite a renewed UNited States US push to end the war in the crude-rich region.
While surging oil prices were boosting share price across the energy sector, they “will only add to the key concern which is dogging (stock) markets, namely the risk of runaway inflation and a resulting increase in interest rates”, noted AJ Bell investment director Russ Mould.
A surge to inflation could force the Federal Reserve and other central banks to wind back the ultra-loose monetary policies that have been a key driver of a year-long equity market rally, according to analysts.
In another sign that the world economy is getting back on track, China at the weekend released data showing a better-than-expected jump in exports in January and February, suggesting global trade is revving up again after being hammered by the Corona virus pandemic.