Yemen is not a major oil producing country, however recent fighting over it by Iran and Saudi Arabia indicate that something major might be at stake. Saudi Arabia is simply not comfortable with Iran backed Houthi Rebels controlling the region.
- Saudi Arabia, kept on bombing Iran, in spite of announcements of ending operation ‘decisive storm’. So far it seems only name of the operation has been changed to ‘restoration hope’. Saudi Arabia, as of now is bombing capital city Sanaa and key Houthi rebels’ position.
Why Yemen is important?
- Despite not a major oil-producing country, Yemen coast borders the Bab el-Mandeb Strait, a narrow chokepoint between the Horn of Africa and the Middle East.
- Bab el-Mandeb is a strategic route for Persian Gulf oil, natural gas, and petroleum product shipments to Europe and North America, as well as European and North African oil exports to Asia.
- Bab el-Mandeb is very vulnerable point as ships need to pass through only 2 miles wide shipping channel.
Moreover Bab el- Mandeb gained prominence in recent years. According to EIA, in 2014 trade grew 20% from a year ago.
Petroleum products transiting through Bab el-Mandeb rose from 2.7 million barrels/day in 2010 to 4.7 million barrels/ day in 2014.
Analysts and traders would be keeping watch of Yemen, trying to judge if the shipments through the channel is at risk. US has deployed naval ships to ensure safe passage through the strait.
The material has been provided by InstaForex Company – www.instaforex.com