Oil Prices Rise Amid Ongoing US Attacks on Yemen’s Houthis
The global oil market witnessed a significant surge in prices on Monday, following the United States’ vow to continue its military operations against Yemen’s Houthi rebels until they cease their attacks on shipping vessels. This development has sparked concerns about the potential for further disruptions to global commerce and a subsequent increase in oil prices.
Rise in Oil Prices: A Response to US Military Action
Brent futures rose by 48 cents, or approximately 0.7 percent, to reach $71.06 per barrel by 9:54 a.m. Saudi time, while US West Texas Intermediate crude futures also increased by 47 cents, amounting to a 0.7 percent rise, and reached $67.65 per barrel. These gains mark the first significant increase in oil prices since the recent slump triggered by concerns over a global economic slowdown.
US Military Campaign: A Long-Term Operation
The US airstrikes against Yemen’s Houthi rebels have been described as the largest US military operation in the Middle East since President Donald Trump took office in January. According to reports, one US official has hinted that this campaign may extend for several weeks, further solidifying concerns about its impact on global oil markets.
Houthi Attacks: Disrupting Global Commerce
The Houthi rebels’ attacks on shipping vessels in the Red Sea have disrupted international trade and triggered a costly response from the US military to intercept missiles and drones. This situation has already led to increased tensions and higher costs for nations involved in global commerce, contributing to the recent rise in oil prices.
Global Economic Uncertainty: A Factor in Oil Price Volatility
The ongoing trade tension between the United States and other nations has fueled concerns about a potential slowdown in global economic growth. Analysts at Goldman Sachs have reduced their forecast for oil prices, anticipating slower US economic growth due to the tariffs imposed on countries such as Canada, China, and Mexico.
Goldman Sachs Reduces Oil Price Forecasts
In a recent note, Goldman Sachs analysts cut their forecasts for Brent and West Texas Intermediate crude futures. They now predict that Brent will fall within the range of $65 to $80 per barrel by 2025, while WTI is expected to reach between $64 and $68 per barrel in the same timeframe. The analysts also reduced their average forecast for Brent and WTI for 2026 to $68 and $64 per barrel, respectively.
Slower Oil Demand Growth: A Key Factor
Goldman Sachs analysts have pointed out that oil demand growth is expected to slow down due to the ongoing trade tensions and potential economic slowdown. This development has contributed to their reduced forecasts for Brent and WTI crude futures.
US Consumer Sentiment Plunges Amid Tariff Concerns
The US consumer sentiment index plummeted to a nearly 2.5-year low in March, fueled by concerns about the impact of President Trump’s tariffs on the economy. Inflation expectations have soared, and worries abound that these policies will lead to higher prices and an economic downturn.
Federal Reserve Meeting: Interest Rate Stance
Next week, Federal Reserve officials are expected to meet and consider leaving the benchmark overnight interest rate in the range of 4.25 percent to 4.50 percent. This decision is likely influenced by their assessment of the economic impact of the administration’s policies and the ongoing trade tensions.
Conclusion
The recent rise in oil prices serves as a reminder of the complex interplay between global economic factors, military conflicts, and international trade agreements. As nations grapple with the challenges posed by these issues, it is essential to consider their potential long-term consequences for the global economy and energy markets.