WASHINGTON (Sputnik), Thomas Zimmer — The global price of oil is unlikely to go up amidst the war in Yemen growing more volatile by the day, experts told Sputnik.
“I can’t see why the civil war there [in Yemen] should affect oil prices,” Boston College Adjunct Professor of Finance Roy Epstein said on Friday.
“The Saudis are intent on keeping the price down to drive out American shale producers,” Epstein added.
The price of oil will not likely increase, because none of the shipping routes for Middle Eastern oil producers will be blocked, Baker Institute at Rice University Senior Geopolitics and Energy Fellow Jim Krane told Sputnik on Friday
“Oil will not be stranded if there is no blockage of the Bab-el-Mandeb straight, one of the key maritime choke points for oil,” Krane said. “They might have to make a trip around the horn of Africa to get out of the Red Sea with the Suez Canal.”
Krane argued the civil war in Yemen would not make a difference in the global price of oil unless the unrest went beyond Yemeni borders and affected shipping vessels, but assessed that possibility as very unlikely.
“The US just got the Fifth fleet operating in the Gulf of Aden just off of Yemen patrolling for privacy, and will likely be taking a closer look now with closer scrutiny or even escorts [at ships],” Krane said. “The Saudis are still getting involved militarily, and are good at keeping the unrest within Yemeni borders.”
Krane also noted that, despite the US diplomatic mission been abandoned in February 2015, the United States Special Forces still operate in Yemen, and will contribute to containing the unrest.
“It [global oil price increases] provide a quick stream of additional revenue to Middle Eastern governments, so they can combat the unrest in their countries,” Krane said. “For the Saudis, if they had an issue, you’d see it reflected in the oil price, and the Saudi government would get extra cash infusion.”
Krane concluded that with only around nine percent of the world oil globally in Yemen, Yemen is a small oil and gas producer, and it is not a significant enough exporter or importer on the world stage to make any real dent in the global price of oil.
Global oil prices have dropped by about 50 percent since the summer of 2014. In November 2014, the Organization of Petroleum Exporting Countries (OPEC) decided not to cut oil output levels, which contributed to a greater slump in prices. The current price of West Texas Intermediate Crude Oil is $51.43 while Brent Crude Oil is $59.19. Both have increased close to 5 percent since Thursday.
