US renews attacks on Houthi rebels in Yemen
March 17, 2025
Energy prices are up to start out this week. Over the weekend the US attacked Houthi rebels in Yemen. The US said it will keep attacking Houthis until they are no longer a threat to shipping in Yemen. The US’s actions appear to be to protect civilians and military vessels around the southern Red Sea. China also reported that retail sales increased from January to February also giving the market something optimistic to trade higher on.
The market is also getting support from increases sanctions on Iran that include the minister of petroleum and specific oil shipping companies. President Trump has also threatened to ramp up sanctions on Russia if progress is not made on the ceasefire deal and the end of the conflict with Ukraine.
Barclays lowered its 2025 Brent crude oil forecast by $9 per barrel to $74 per barrel, citing a softer demand outlook amid increased economic uncertainty.
ANZ lowered its short term (0-3 months) oil price target to $75 per barrel. It sees upside to oil prices in the short term as tariffs on Canadian crude and rising disruptions to supply from Iran and Venezuela keep the market tight.
Baker Hughes reported the US energy firms this week kept the number of oil and natural gas rigs operating unchanged. The oil and gas rig counts was steady at 592 in the week ending March 14. Baker Hughes reported the oil rig count increased by one to 487 this week, while gas rigs fell by one to 100.
Citigroup warned that weaking returns may stifle drilling and US oil prodctuion if WTI remains around $65 per barrel. However, if prices fall further, shale operators may shut down more drilling rigs and reduce crude prodctuion, with a fall to the upper $50 potentially resulting in larger psychological impact.