Yemen strike impacts on oil prices

Oil prices fell by more than $1 on Friday as supply has become almost stable.

According to Goldman Sachs, the strikes in Yemen would have little effect on oil supplies because the country was only a small crude exporter.

Moreover, tankers could avoid passing its waters to reach their ports of destination.

Despite the fact that oil prices have fallen, they could end higher than at the start of this week.

Oil jumped around 5 % on Thursday which was the biggest daily gain in a month.

Air strikes in Yemen by Saudi Arabia and its Gulf Arab allies lead to threats that escalation of the Middle East battle could influence crude supplies.

Moreover, the rally had been worried about the possible impact on the Bab el-Mandeb strait whose closure could affect 3.8 million barrels a day of crude and product flows.

Yemen is a small oil producer, with an output of around 145,000 barrels per day in 2014. Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance said that if the feud became a regional conflict involving Islamic militants, then there was the possibility that oil prices could climb.

However, a blockade of the Bab el-Mandeb strait which was the point for shipping between the Red Sea and Gulf of Aden seemed unlikely.

ANZ analysts said on Friday that a bigger impact from the Middle East on oil prices might come from a potential nuclear deal with Iran.

This deal could result in a loosening of western sanctions against Tehran and increasing exports of its oil reserves.

However, both Goldman and ANZ noted that any nuclear deal with Iran was unlikely to lead to higher Iranian oil exports before the second half of the year.

Priscilla Camryn By: Priscilla Camryn