The global crude oil price on Monday dropped to $68.06 per barrel after breaking past $70 per barrel for the first time since January 2020 on Monday morning.
Brent at one point peaked at $71.38 — the highest level since January 2020 before falling back to $68.06 per barrel.
The strike on the Aramco facilities — including one of the world’s biggest oil ports — by Yemen’s Huthi rebels Sunday followed the bombing of the country’s capital Sanaa by a Saudi-led military coalition.
The rising hostilities underscore a dangerous intensification of Yemen’s conflict between the coalition-backed Yemeni government and the Iran-backed Huthis, despite a renewed US push to end the war in the crude-rich region.
While surging oil prices were boosting share price across the heavyweight energy sector, they “will only add to the key concern which is dogging (stock) markets — namely the risk of runaway inflation and a resulting increase in interest rates”, noted AJ Bell investment director Russ Mould.
A surge to inflation could force the Federal Reserve and other central banks to wind back the ultra-loose monetary policies that have been a key driver of a year-long equity market rally, according to analysts.
In another sign that the world economy is getting back on track, China at the weekend released data showing a better-than-expected jump in exports in January and February, suggesting global trade is revving up again after being hammered by the coronavirus pandemic.