Violence in the Middle East sends the global energy market crashing

Escalating violence in the Middle East caused disruption in the global energy market on Monday morning after a major oil company announced it was halting shipments through a crucial shipping route.

British Petroleum (BP) said it is halting oil shipments through the Red Sea due to increased attacks launched by Yemen's Iran-backed Houthis, a militant Islamist group that the Biden administration Removed off the “Foreign Terrorist Organization” list in 2021. BP is the latest major company to halt operations amid escalating violence in and around the Red Sea, with the announcement sending oil prices soaring all over the world seconds on CNN.

“In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily halt all traffic through the Red Sea,” a company spokesperson told the Daily Caller News Foundation. “We will keep this precautionary pause under continuous review, subject to circumstances as they evolve in the region.”

This is an escalation. On Saturday morning, a US warship shot down a wave of 14 suicide drones launched at once from Houthi-controlled Yemen. @DailyCaller https://t.co/3nAekAGEVm

— Micaela Burrow (@micaela_burrow) December 16, 2023

Along with a key Egyptian pipeline, two major straits that connect to the Red Sea handled about 12 percent of the world's traded marine oil and 8 percent of global liquefied natural gas shipments in the first six months of this year . seconds in the Wall Street Journal.

The news sent oil prices higher around the world on Monday, with Brent crude up 2.7% to nearly $79 a barrel and U.S. crude up 2.7% to $73.44 a barrel , according to CNN. In European markets, futures for natural gas contracts rose 8%.

Before BP decided to stop its shipping operations in the Red Sea, AP Moller-Maersk and Hapag-Lloyd, two major shipping companies, announced that they were temporarily preventing their ships from using the southern entrance to the Red Sea , according to the WSJ.

The Houthis have done this significantly increased attacks against commercial interests and US forces in the wake of the Hamas attack on Israel on October 7. Houthi forces have repeatedly launched missiles and drones at commercial shipsand the Biden administration has little on the way to retaliation or preventive action against the group.

The Biden administration chose to cut loose 180 million barrels of oil from the Strategic Petroleum Reserve (SPR) ahead of the 2022 midterm elections, when high energy costs were causing political problems for President Joe Biden and his fellow Democrats. The vast majority of these emissions have not yet been offset, and the SPR, intended to serve as an emergency supply of oil for the US in the event of war or an emergency situation, is on hold. lower levels in decades.

After the outbreak of the Israel-Hamas war, energy experts he said the DCNF that the administration's SPR releases leave the US in a more vulnerable geopolitical and economic position, particularly if the conflict spreads to other parts of the Middle East.

“That's exactly why we have an SPR. But now we only have half of an SPR since Biden sold half to buy some votes,” said Dan Kish, a distinguished senior fellow at the Energy Research Institute (IER), to the DCNF on the BP announcement.

The White House did not immediately respond to a request for comment.

Latest messages from Nick Pope (see everything)

We have zero tolerance for comments that contain violence, racism, profanity, profanity, doxing, or rude behavior. If a comment is spam, instead of replying to it, click the ∨ icon below and to the right of that comment. Thank you for engaging with us in a fruitful conversation.

JOIN OUR NEW COMMENT SYSTEM! We love hearing from our readers and invite you to join us for feedback and good conversation. If you've commented with us before, we'll need you to re-enter your email address for this. The public won't see it and we won't share it.