This is the kind of thing that adds so much unpredictability to the oil and gas market.  Yemen is an oil producing country, although it doesn’t produce a lot.  It also happens to be next door to the second largest oil producing country, Saudi Arabia.  Russia is number one, in case you were wondering, and the U.S. is a close third, with the likelihood of being or becoming number one very quickly.  But that’s beside the point.

Yemen has seen a lot of turmoil lately.  President imprisoned, president escaping, president declaring new capital city, rebels taking over, suicide bombings, all kinds of crazy stuff.  I feel for them.  I’d hate to be living in that kind of a political situation.

Today, Saudi Arabian jets carried out air strikes in Yemen.  Oil prices jumped a couple dollars as a result.  Why?  It doesn’t seem to me that it should.  Stockpiles of oil are very high, and it doesn’t appear that any oil fields or pipelines were targeted.  At least, there’s nothing in the news to indicate that they were.  There are shipping lanes that run right next to Yemen, but they are not being disrupted at the moment, either.

So it seems to me that oil prices jumped because of unpredictability.  Yemen is becoming less stable, and Iran and Saudi Arabia are involved, so of course oil is suddenly more valuable.  That’s the way the market works.  It’s weird, but it’s true.

Edit: I’d like to point out that the very next day oil prices dropped almost the same amount that they had jumped.  Everybody had a minute to look at the situation and realize it wasn’t all that bad after all.  I’d also like to point out that somebody in Saudi Arabia knew that the strikes were going to happen and that oil prices were going to jump because of it.  Somebody probably made a good chunk of change in the stock market.