Oil price mute, fighting in Yemen heats up

Last few days saw dramatic escalation in fighting between Houthi rebels and Saudi Arabia led Arab group over control of Yemen.

• Houthi rebels are strongest force in Yemen and seized Yemen's capital last year. Yemen's President Rabbu Mansour Hadi has left country last week seeking refuge in Saudi Arabia. Saudi Arabia clearly expressed that it wishes previous government led by Mr. Hadi to comeback to power and will fight on to ensure such. Pakistan has said, it will be sending troops to aid Saudi Arabia.
  
  
• Iran has still not participated directly in the conflict as it negotiates over nuclear deal with world powers. Iran has backed longtime ruler Ali Abdullah Saleh, who was pushed out from three years ago. Iran tried to pursue talks with Saudi Arabia to end Yemen conflict in peace, however it said that it stands ready for war, should other options ignored.

Recent heavy exchange of artillery between Saudi Arabia and rebel forces indicate, that conflicts might run a long course before any solution or pullback.

Saudi Arabia has been amassing ground troops across boarder, suggesting a full scale invasion might be on its way.

• Heavy fighting is reported to be taking place near Saudi borders and important city of Aden.

Energy chokepoints -

• Latest report suggest that, Houthi rebels seem to have taken control of a military base in coastal region, which overlooks strategic crude oil checkpoint Bab el Mandeb in Red Sea.

Bab el Mandeb is a crucial checkpoint for crude, connecting Gulf of Aden and Arabian Sea. Near about 3 million barrels of crude oil passes the point to reach Asia, Europe and US.

Traders and investors have so far shrugged of the updates and crude price remained downward focused. Brent is trading $54.9/barrel. Nevertheless traders should keep their guards high over upcoming volatilities and escalation.