Thursday, January 7, 2016

Yemen Oil ?

Story image for yemen from New York Times

Iran Accuses Saudi Arabia of Hitting Embassy in Yemen

New York Times-1 hour ago
TEHRAN — Iran accused Saudi Arabia on Thursday of an aerial attack on its embassy in Sana, the capital of Yemen, in a potential escalation ...

Why Does Yemen Matter to the World’s Oil Market?

 MAR 26, 2015
Oil prices surged on Thursday as Saudi Arabia and its allies carried out airstrikes in Yemen against the country’s ruling Houthi militants. Yemen doesn’t produce a lot of oil, but there are reasons why oil markets would react to military action there. Why? Here’s the short answer.

·                                 Why is Yemen important to the world oil market?

Yemen is only a small oil producer, but it lies at the heart of some of the most important energy routes. It shares a long border with southwest Saudi Arabia, world’s top oil exporter, and is adjacent to the Bab el-Mandeb strait, the fourth-biggest shipping chokepoint in the world by volume. About 3.8 million barrels a day of petroleum passed through the strait in 2013, according to the U.S. Energy Information Administration. Closing the strait could keep tankers in the Persian Gulf from reaching the Suez Canal and the SUMED Pipeline, diverting them around the southern tip of Africa, EIA said on its website.

·                                 What is the likelihood of a closure at Bab el-Mandeb Strait?

Analysts doubt that Iranian-backed Houthi militants have the modern weaponry needed to close the strait or cause any serious disruption to shipping in the area. The Houthis have said they would keep the strait open to oil traffic.

·                                 How much oil Yemen is currently producing?

Yemen, a relatively small oil producer by Middle Eastern standards, saw output fall to around 130,000 barrels a day in 2013, or about 0.1% of global production, from more than 440,000 before anti-government protests led to a power vacuum in 2011, according to the EIA.

·                                 Are oil companies pulling out of Yemen?

The political upheaval in Yemen has already dealt a powerful blow to the country’s oil industry, forcing companies to abandon productive oil patches and evacuate staff weeks before the strikes began. In January, Houston-based Occidental Petroleum Corp., which has been operating in Yemen for nearly three decades, flew its staff out of the country after gunmen stormed its compound in the capital, San’a, where Houthi militants have tightened their grip on power.
Since then, executives and local officials said, Norway’s DNO ASA, Dove Energy Group of Dubai and Nexen Inc., which is owned by China’s Cnooc Ltd., are all moving to relinquish their rights to blocks that produce thousands of barrels of crude a day.

·                                 Are oil prices likely to continue rising on Yemen?

The threat of a wider regional conflict is roiling markets, but whether the oil price rally lasts depends on how Iran reacts to Saudi Arabia, a Sunni Muslim country, bombing a Shiite Muslim tribe in Yemen. “We are witnessing the return of a geopolitical premium. Unless Iran reacts in a bellicose fashion, this premium will be short lived and presents a selling opportunity,” said oil broker PVM in a note to clients. “Fundamentals have not changed, worry has but it can evaporate quickly,” it added.

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