Fight has intensified in Yemen over the weekend as Saudi supported rebel groups trying to take over an important airport from Iran backed Houthi fighters near Aden Port.
- Saudi Arabia is reported to be preparing for ground invasions according to sources, however officially it has so far been denied. Expect Brent to move higher should ground troops get involved. Current fighting is supervised by Saudi led coalition. The local fighters are getting air support from Saudi Arabia.
Current coalition is getting support from United States, France and Britain. US has deployed ships to keep the channel secure for ships to pass.
Yemen holds border with Bab el-Mandeb passage through which according to EIA about 4.5 million barrels of energy passes every day via shipping channel, making it one of the most vital channels for Fuel transfer in Middle East.
Response from Iran has so far been mute, as Iran awaits to finalize nuclear deal with world powers by June and would like to take no such action that might derail the possibility. Iran has urges Saudi’s to solve the matter diplomatically.
However, current turmoil unlikely to call for global risk aversion unless Iran gets involved in serious fighting.
Brent crude is currently trading at $66.9/barrel, further rise seems likely amid weaker dollar, though it may not be a one way ride.
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