Global energy markets at risk amid Red Sea tensions

Experts caution against potential global impacts on energy markets due to escalating tensions in Yemen, citing a temporary surge in oil prices and disruptions to trade routes.

An industry analyst has issued a stark warning about the potential risks facing global energy markets amidst escalating tensions in Yemen and the Red Sea.

In an interview with Energy Live News, Ricardo Evangelista, Senior Analyst at ActivTrades, highlighted that the escalating tensions have led to a temporary rise in oil prices, surpassing $80 (£63.1) per barrel.

Ricardo Evangelista said: “With some of the world’s main shipping operators confirming that the region is now a no-go area, transport of goods from Asia and oil from the Gulf region to the West will be done via the lengthier and more expensive Cape route.

“With approximately 12% of global trade passing through the Suez channel, the timing for the global economy could hardly have been worse.

“If the conflict is not resolved soon, global prices will increase because of higher transportation costs. At the same time supply chains, some still recovering from Covid-related disruption, will also suffer.

“Against this background, this is a conflict that may impact the UK and the rest of the globe, hindering the fight against inflation and potentially forcing central banks to keep restrictive policies for longer.

“Such a scenario would be likely to reduce risk appetite, affecting stock markets and benefiting safe havens such as gold and the Swiss franc.”