Recent US-UK strikes in Yemen due to the attacks by Houthi rebels in the Red Sea have caused oil prices to rise by 4%.
While still being below the levels reached when Russia invaded Ukraine, Brent Crude Oil hit $80 per barrel for the first time this year. This increase came as the Iran-backed rebels vowed to retaliate against the recent military action by these Western powers.
Concerned that this could cause further upset to the UK economy, the Government have drawn up scenarios suggesting further disruption that could happen. These include crude oil prices rising by more than $10 per barrel and a 25% increase in natural gas. But why is the UK Government worried that ongoing attacks on shipping in the Red Sea could negatively affect the country’s economy? Because growth in this sector remains fragile.
Additionally, during a time where so many people are suffering from a cost-of-living crisis, these recent attacks cause further financial uncertainty because rising oil prices mean higher energy prices… and this means stoking inflation just as it has started to slow down. Meanwhile, the cost of shipping containers on vessels has also increased, meaning that companies could be forced to deal with the rising costs by increasing the expense to consumers.
Prime Minister, Rishi Sunak has commented saying that the attacks caused ‘major disruption to a vital trade route and higher commodity prices’.
From the perspective of the aluminium industry, a rise in energy prices is detrimental due to the lead up of a wave of aluminium capacity cuts across Europe as smelters struggle with sky-high gas and power prices, while the demand remains light due to the concerns about global economic growth.
For more information, please visit: Oil prices rise on US-UK strikes over Red Sea attacks – BBC News
