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 The air strikes against Houthi rebels, who have driven the
president from Yemen's capital Sanaa, could stoke concerns about the
security of Middle East oil shipments.
Brent futures <LCOc1> were up $2.27 at $58.75 by 1034 GMT (0634
EDT). U.S. crude <CLc1> was up $2.03 at $51.24 a barrel.
Brent and U.S. crude prices spiked around 6 percent earlier in the
session but pared gains in European trading.
"Geopolitical risk like this has been on the back burner for a while
because we've been focusing on global oversupply," said Ole Hansen,
head of commodity strategy at Saxo Bank.
"This news has not made the oversupply go away. The upside potential
is limited unless something escalates. We need to see how this
unfolds over the next couple of days," he said.
Iranian officials demanded an immediate halt to Saudi-led military
operations in Yemen and said Tehran would make all necessary efforts
to control the crisis there, Iranian news agencies reported.
In order to export to Europe, Arab producers have to ship oil past
Yemen's coastlines via the Gulf of Aden to get to the Suez Canal.
The waters between Yemen and Djibouti, known as Bab el-Mandeb, are
less than 40 km (25 miles) wide. They are considered a "chokepoint"
to global oil supplies by the U.S. Energy Information Administration
(EIA).
The EIA estimates that 3.8 million barrels a day of crude oil passed
through Bab el-Mandeb in 2013, the latest year for which figures
were available.
The region is heavily populated with Western military forces. The
United States and France operate large military bases in Djibouti.
NATO's anti-piracy fleet also operates from the Gulf of Aden.
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While the strikes have not affected major oil facilities of key Gulf
producers, such as Saudi Arabia, there are concerns that the
conflict might widen. The Shi'ite Houthis have received some support
from Iran, Saudi Arabia's long-time rival for dominance in the
Middle East.
Yemen shut its major seaports on Thursday, industry and local
sources said.
China's Foreign Ministry said it was deeply concerned about the
worsening situation in Yemen.
Some analysts, however, said the strikes could lead to more
stability in the region, if they resolved the conflict in Yemen.
"If this is a prelude to a bigger operation in the Middle East, that
may lead to some stability in the region," said Mari Iwashita, chief
market economist at Tokyo's SMBC Friend Securities.
(Additional reporting by Aaron Sheldrick and Osamu Tsukimori in
Tokyo, Meeyoung Cho in Seoul, Henning Gloystein and Florence Tan in
Singapore; Editing by Dale Hudson)
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