Yemen crisis sees oil prices rise in possible threat to producers

World oil prices advanced Wednesday on worries that political instability in Yemen could threaten key Middle Eastern petroleum producers, offsetting concerns about a growing US crude glut.

US benchmark West Texas Intermediate for May delivery gained $1.70 to $49.21 a barrel on the New York Mercantile Exchange,

European benchmark Brent oil for May delivery rose $1.37 to $56.48 a barrel in London.

Analysts cited news that Yemen President Abedrabbo Mansour Hadi was rushed to a “secure location” after a warplane attacked his presidential complex.

Yemen, which borders major oil producer Saudi Arabia, has been gripped by growing turmoil since the Huthi Shiite rebels launched a power takeover in Sanaa in February.

The strife has raised fears that the country could be torn apart by a proxy war between Shiite Iran, accused of backing the rebels, and Sunni-ruled Saudi Arabia, which supports Hadi.

Crude prices were also supported by another drop in the dollar. The weaker greenback makes dollar-priced commodities cheaper for buyers using stronger currencies.

The rise in oil came despite another large increase in US crude stocks, which jumped by 8.2 million barrels for the week ending March 20.

Stocks at the closely-watched Cushing, Oklahoma hub swelled by nearly two million, or 3.5 percent, to 56.3 million barrels.

“Although the dollar has joined the US drilling rig count as a second motivation for investors to guess at a bottom in crude oil prices, we continue to see evidence of an ongoing surplus,” said Timothy Evans, an energy analyst at Citi Futures.