Saudi Arabia airstrikes in Yemen (Photo : Twitter)
Oil prices surged up as Saudi Arabia-the world's largest exporter of crude-together with its allies launched airstrikes on their rebel targets in Yemen.
The airstrikes stimulated concerns from the beneficiaries that the dispute could spread through the oil-rich countries in Middle East and might disrupt the supplies from the region.
According to BBC News, the Brent crude went up nearly 6 percent to $59.78 per barrel, but then dropped to $57.88.
Although it has been confirmed that there was no immediate threat to Middle East oil shipment, doubts remain that Iran could be involved and drawn into the conflict. These concerns were weighed on European share markets on Thursday.
Yemen is in a crucial point as of now since it is located along an important international shipping route for the global energy producers. Manufacturers have to get past the Yemen coastline through the Gulf of Aden to get to Suez Canal-which is a key passageway to Europe. The problem is that the country is sliding little by little towards civil war.
Senior vice president of energy futures Joseph Posillico said, "You don't want to be short oil when there are stories about bombings next door to Saudi Arabia, even if it's the Saudis who are leading the charge."
"But with shorts squeezed out of the market, particularly those under $50 WTI, we are reassessing where to go. I personally don't think this rally has legs as fundamentally nothing's changed," he added, in reference to Reuters.
According to a Saudi military spokesman, launching ground operations in Yemen is not a high priority at this point. Nonetheless, the country strengthened security at borders as well as around oil and industrial facilities.
Iran, on the other hand, denounced the Saudi airstrikes. In a phone conversation with his Iranian counterpart, Russian President Vladimir Putin mandated an immediate ceasefire. Meanwhile, Pakistan being a Riyadh ally promised a rather strong response if there is any threat posed against the Saudi integrity.
