Oil prices climbed for the fifth consecutive day on Thursday, with Brent crude surpassing $89 a barrel, after Houthi rebels in Yemen attacked two Saudi-flagged oil tankers in the Red Sea. The strikes, which occurred near the strategic Bab el-Mandeb strait, have reignited concerns about the security of one of the world's most vital maritime chokepoints for crude shipments.
The London-listed energy sector was the primary beneficiary of the rally. Shares in Shell rose 1.2%, while BP added 0.9% as traders priced in higher margins. However, the broader FTSE 100 index slipped 0.4% to 8,212 points, dragged down by weakness in consumer-facing stocks and property firms, as the prospect of sustained higher energy costs weighed on sentiment.
Analysts at Capital Economics noted that the attacks come at a time when global oil inventories are already tight, with OPEC+ maintaining production cuts. 'Any disruption to Red Sea tanker traffic forces vessels to take the much longer route around the Cape of Good Hope, adding both time and cost,' said a commodities strategist. 'For UK motorists and households, this means the recent decline in petrol and heating oil prices could stall or reverse.'
The Houthi campaign, which the group says is in solidarity with Palestinians amid the Gaza conflict, has intensified over recent weeks. While Saudi Arabia has not publicly retaliated, maritime security sources indicate that naval patrols in the region have been stepped up. The UK Foreign Office reiterated its condemnation of the attacks and called for de-escalation.
For UK investors, the immediate implications are mixed. Pension funds with exposure to energy majors may see short-term gains, but the broader market is pricing in the risk of prolonged inflationary pressure. 'If oil stays above $90, the Bank of England will find it harder to cut interest rates later this year,' warned a market analyst. 'That would hit gilt prices and, by extension, pension scheme valuations.'