Oil prices surged on Thursday to cross $105 per barrel as supply concerns grew after the Houthi rebels seized the key Yemeni Red Sea port of Mokha, near the Bab Al Mandeb strait.
The development gives the Iran-backed group greater control of the strait, a key waterway through which about 10 per cent of global oil supplies flow.
Brent, the benchmark for two thirds of the world's oil, was up 4.12 per cent to $105.4 a barrel at 4.45pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading 4.29 per cent higher at $100.20 a barrel.
"The advance of the Houthi rebels, capturing key strategic locations such as Mokha and the Mayun Island in the Bab Al Mandeb strait are frightening the oil market," Sasha Foss, energy analyst at CSC Commodities, a division of Marex, told The National. "It imperils the flows in and out of the Red Sea at a time when the Strait of Hormuz is already partially blocked."
The Bab Al Mandeb strait is particularly important for Saudi Arabia, Opec's largest producer. Its oil exports to the Asian market mainly pass through the 20km-wide channel.
The Houthis previously declared a "maritime embargo" against Saudi Arabia and have launched attacks on ships passing through the channel. The kingdom has been rerouting its oil cargoes through the Mediterranean, following Houthi attacks.
The Strait of Hormuz also remains effectively shut amid the US-Iran war. The two countries have intensified attacks on tankers in recent days, raising oil supply fears in global markets.
The number of vessels crossing the Strait of Hormuz on a daily basis has dropped sharply compared with the more than 100 ships that passed through the waterway before the conflict began on February 28. The number of vessels transiting the Bab Al Mandeb strait has also fallen as tensions escalate.
Oil prices surged to an intraday high of $126 per barrel in late April after strikes by the US and Israel on Iran, and Tehran's attacks on its Gulf neighbours and Iraq.
Prices fell in subsequent months after peace talks were held to end the war, but prices have again surged as the US and Iran exchange missile and drone strikes.
