Could Yemen prompt an oil rally?

March 27, 2015

Shi'ite Muslim rebels hold up their weapons during a rally against air strikes in Sanaa

Yemen’s President Abd-Rabbu Mansour Hadi has fled his refuge in Aden for Saudi Arabia as Houthi rebels battled with his forces on the outskirts of the southern port city.

Warplanes from Saudi Arabia and Arab allies continues to hit Shi’ite Houthis and allied army units, who have taken over much of the country and seek to oust Hadi.

Yemen’s slide towards civil war lays bare Saudi Arabia’s rivalry with Iran, which Riyadh accuses of fomenting unrest throughout the region. A proxy war looks to be in prospect.

Oil prices, having spiked on Thursday, dropped back more than $1 as worries of a disruption to crude supplies eased. Goldman Sachs said the war in Yemen would have little effect on oil supplies as the country was only a small crude exporter and tankers could avoid passing its waters.

The halving of oil prices since the middle of 2014 has been arguably the defining economic event of the past year, threatening deflation in some countries while boosting discretionary spending in a way that should boost growth.

Central bankers are still grappling with that conundrum and the currency volatility that has accompanied it.

We get a clutch of the financial elite at a conference in Frankfurt today. Federal Reserve policymaker Richard Fisher, Bundesbank chief Jens Weidmann, Bank of England Governor Mark Carney, ECB bank supervisory chief Daniele Nouy, German Finance Minister Wolfgang Schaeuble and Spanish Finance Minister Luis de Guindos are all down to speak.

The ratings agencies appear to be clearing the decks for the Easter holiday. S&P is due to review Cyprus, Austria, Denmark, Finland and Luxembourg today while Fitch has Portugal, Nigeria and Slovenia in its crosshairs.

Prime Minister David Cameron won the first TV encounter of a close national election in Britain, according to an opinion poll, but opposition Labour leader Ed Miliband may not be unhappy.

His personal ratings are much lower than Cameron’s but he was seen to have acquitted himself competently which may have exceeded public expectations of him. Miliband will launch his election campaign today.

Iran’s president spoke with the leaders of France, Britain, China and Russia on Thursday in an apparent effort to break an impasse to a nuclear deal between Tehran and major world powers with negotiations getting under way again.

The United States is pushing for a nuclear deal between Iran and major powers before a March 31 deadline, and officials close to the talks said some kind of preliminary agreement was possible though serious differences remain. The six powers hope to reach a comprehensive nuclear agreement by June 30.

The pilot who appears to have deliberately crashed a plane carrying 149 others into the French Alps received psychiatric treatment for a “serious depressive episode” six years ago, German daily Bild reported on Friday.

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