Bombing of Yemen spooks investors into believing supply lines could be affected and causing crude to jump 4% on global markets.
Oil prices surged on global markets as jumpy investors weighed the risk that tensions in Yemen could spiral into a wider Middle East conflict, choking off crude supplies.
The cost of a barrel of benchmark Brent crude rose more than 4% on Thursday, to $58.93 (£39.55), after reports emerged about Saudi-led air strikes on the Yemeni capital, Sana’a, and the southern port city of Aden – close to the key oil supply route through the Gulf of Aden and the Suez canal. A barrel of US West Texas intermediate jumped $2.17, to $51.37.
Meanwhile share prices sold off sharply in the City as fears of political risk in the Gulf, together with Federal Reserve officials’ renewed insistence that they are gearing up for a rate rise and the continuing problems with Greece’s finances, sent investors scurrying for safe-haven assets. The price of gold rose 1%, to $1,206 an ounce.
“The air strikes in Yemen have really created a risk-off mood,” said Rabobank strategist Philip Marey.