Crude Rallying As Yemen Tensions Soar

Middle East Tensions Drive OilOil prices are surging higher on Friday as worrying developments in the Middle East point to heightened supply disruptions. Iran reportedly seized an oil tanker in the Gulf of Oman yesterday carrying around 145 tonnes of crude. While the attack was not linked to Houthi rebels, uncertainty in the area was then amplified overnight by news that the US and UK carried out co-ordinated missile strikes on Houthi rebel sites in Yemen. The joint action is aimed at stopping the recent spate of Houthi attacks on Red Sea shipping routes which have created huge unease in the global shipping market and are directly impacting oil prices.Upside Risks for CrudeWith the situation in the Middle East looking increasingly tense, oil prices look vulnerable to further upside near-term. The prospect of further US/UK remains elevated should Houthi-rebel attacks continue on Red Sea shipping routes. The Houthis have vowed to continue the attacks until Israel ends its military operations in Gaza. As such, the situation remains highly precarious and oil prices are likely to see further upside movements on news of any fresh escalation of violence in the region.Technical ViewsCrudeThe rally in crude off the 66.79 lows is starting to gather pace again with price having potentially carved out a higher low around the 69.70 mark. Price is now back above the 72.61 level and with momentum studies moving higher, the focus is on a fresh test of the 77.64 level next which, if broken, paves the way for a fuller reversal higher in crude.