The global oil market has seen falling oil prices in recent times – from the high of $90 a barrel in Sept-23 to a bless than $80 a barrel in Dec-23. But uncertainty has always pushed oil prices up, and it’s always a long upwards spike when it’s a geopolitical conflict that raises volatility. The recent strikes by the US and the UK on Yemen have raised instability and security concerns in the Middle East, which sent prices up.

News reports suggest that even though there was no immediate impact on supplies with escalation in the Red Sea, the traders will have to remain vigilant of potential escalation of the conflict in the coming days. Goldman Sachs has called the current risk levels moderate for oil prices; however, in a less likely extended disruption, it has estimated that the prices may double.

The tension in the region has been brewing since the Israel-Palestine conflict. The attack on Yemen by the world leaders has charged the oil prices. An escalation from this point into the future will most likely boost prices – risks of which do exist and investors do eye a conflict in Middle East. Bear in mind that the Red Sea is an important commercial shipping lane that accounts for around 15 percent of the total global sea trade that includes food, oil and LNG.

Not only that. 2024 must brace for higher oil prices because the global demand is also returning and the supplies are already shrinking amid low inventory levels.