Tokyo - Oil prices fell in Asia on Friday, cutting short a rally as investors weighed the potential for disruptions in Middle East supplies caused by the Yemen crisis and a global crude glut, analysts said.
The US benchmark, West Texas Intermediate for May delivery, fell 83 cents to $50.60 and Brent crude for May eased 75 cents to $58.44 in late-morning trade.
Prices rose sharply over the past two days after a Saudi Arabia-led coalition bombed Huthi Shi’a rebels in support of Yemen's embattled President Abedrabbo Mansour Hadi.
Yemen is bordered by key Middle East oil producers Saudi Arabia and Oman.
“The recent developments in Yemen have caused oil prices to jump on fears of disruption to supplies,” research house Capital Economics said in a market commentary.
There are concerns that an escalation of the conflict could disrupt oil shipments passing through the Bab el-Mandeb Strait, located between Yemen and Djibouti and through which about 3.8 million barrels of oil per day are transported, it said.
Yemen has been gripped by turmoil since the Shi’a rebels launched a power takeover in Sana'a in February.
Powerful explosions rocked the capital Thursday night as the Saudi-led coalition carried out air strikes against the rebels, an AFP correspondent reported.
There were also air strikes in the south of the country, while clashes continued in the southern port of Aden, the bastion of Hadi.
“The main concerns for the oil market seem to be that the direct involvement of Saudi Arabia and its allies in Yemen has raised the potential for a broader regional conflict with Iran, which backs the Huthi rebels, and that movements of oil through the Bab el-Mandeb Strait could be disrupted,” Capital Economics said.
Shi'a majority Iran has condemned Saudi's intervention.
Other analysts said the impact of the Yemen crisis on the oil market is being tempered by the crude oversupply, which has been fanned by record US stockpiles and the Opec cartel's refusal to slash production.
“Despite all this increase, we continue to see weak oil fundamental and thus, find it extremely hard for current prices to persist,” Daniel Ang, an investment analyst with Phillip Futures in Singapore, said in a market note.
AFP