Senior Houthi official holds talks in Tehran after Red Sea clashes
Senior Iranian officials have held talks with a Houthi delegation amid escalating tension with the West after Tehran sent a warship to the Red Sea.
Iran sent the ship after a deadly clash between US forces and Houthi fighters on Sunday, in which 10 militants were killed by American helicopters after attacking a commercial vessel.
Iran’s Parliament Speaker Mohammad Baqer Qalibaf and Foreign Minister Hossein Amirabdollahian met senior Houthi spokesman Mohammed Abdulsalam in Tehran on Monday to discuss “issues of common interest”.
The talks also focused on “the peace path and international negotiations, as well as developments in the Israeli aggression against the Palestinian people in the Gaza Strip, and the necessity of strengthening the steadfastness of the valiant Palestinian resistance”, Mr Abdulsalam said. Semi-official Iranian news agency Tasnim reported on Monday that the Alborz ship had entered the Red Sea, where a US-led maritime coalition has been stationed to stop Houthi attacks on vessels traversing the waterway.
The weekend’s clashes, which followed a Houthi attack on a Maersk cargo vessel, increased the risk of the Israel-Gaza war escalating into a wider regional conflict.
Mohammed Al Houthi, a senior leader of the Yemeni rebel group, warned the Netherlands yesterday not to be drawn into a battle in the Red Sea. Britain, Bahrain, Canada, France, Italy, the Netherlands, Norway, the Seychelles and Spain are all part of the US-led coalition.
“If the Dutch want to work to secure international navigation and prevent the outbreak of wars, they must put pressure on Israel to stop its aggression and lift the siege on 2.1 million people inside Gaza,” Mr Al Houthi told Dutch broadcaster NOS.
As well as the Houthis, Iran also supports Hamas, the ruling faction in Gaza, in its war with Israel. Other Tehran-backed armed groups in the Middle East have launched attacks against Israel, and against US troops in Iraq and Syria.
A wider conflict could lead to the closure of crucial waterways in the Red Sea and the Strait of Hormuz, forcing ships transporting oil to opt for longer and more expensive routes.
Mr Al Houthi said the rebel group remained defiant despite the latest clash in the Red Sea with the US-led coalition.
“America was unable to do anything today, and it is too incapable of being in another alliance, and the more warships there are in the Red Sea, the easier it will be for our armed forces,” he said.
Oil prices rose on the first day of trading this year on fears of Red Sea supply disruptions and hopes of an improving demand outlook in China.
Brent, the benchmark for two thirds of the world’s oil, was trading 2.10 per cent higher at $78.66 a barrel at 5.38pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 2.27 per cent at $73.28 a barrel.
Crude futures recorded their biggest annual drop since 2020 last year at a time of record US oil production and a slowdown in major economies. On an annual basis, Brent ended 2023 more than 10 per cent lower, while WTI dropped by nearly 11 per cent.
On Sunday, Yemen’s Houthi rebels launched three anti-ship missiles at a commercial vessel, the Maersk Hangzhou, a Singapore-flagged container vessel.
One struck it, causing damage but no casualties, while two of the missiles were shot down by the USS Gravely destroyer.
The US said that a naval task force formed in December had shot down four ballistic missiles and 17 drones fired by the Iran-backed militia.
The Bab Al Mandeb, located at the southern edge of the Red Sea, is a route for oil tankers and vessels between the Arabian Gulf and Asia, as well as to Europe by way of the Suez Canal.
About 12 per cent of the seaborne oil trade and 8 per cent of liquefied natural gas passes through the strait.
Meanwhile, manufacturing activity in China, the world’s second-largest economy, fell for the third month in a row, raising expectations of stimulus measures to revive growth. China’s official manufacturing purchasing managers’ index (PMI) fell to 49 last month from 49.4 in November, the third consecutive month of a reading below the neutral 50 mark, and below consensus expectations of an improvement to 49.6.
The deterioration in the official manufacturing PMI stood in contrast to the Caixin manufacturing PMI reading, which improved to 50.8 in December from 50.7 the month before.
Investors will closely follow data points to be released by the US this week.
The minutes of the December 13 Federal Reserve meeting will be out today and could potentially shed light on the more “dovish” remarks made by chairman Jerome Powell last month, Jeanne Walters, Emirates NBD senior economist, said.
The Fed left interest rates unchanged after 2023’s last policy meeting but indicated that it would cut rates more than once this year.
The central bank has raised interest rates by 525 basis points since March 2022 after an inflation surge in the US.
Higher interest rates could dampen economic growth, lowering crude demand.
The Labour Department will also release November job openings data today, after openings fell in October to their lowest in two and a half years in a sign of a loosening labour market in the US. Last week, the US Commerce Department’s Personal Consumption Expenditures report showed that inflation fell to 2.6 per cent in November from 2.9 per cent the month before.
Meanwhile, inflation in the UK fell to 3.9 per cent in November from 4.6 per cent in October, representing a bigger dip than predicted and the lowest figure in two years.
“Geopolitics could still spoil the game and push commodity prices higher,” said Gary Dugan, chief investment officer at Dalma Capital.
“Although inflation pressure has abated, we suspect it may linger longer than the market’s current price,” Mr Dugan said.
On an annual basis, Brent ended 2023 more than 10 per cent lower, while WTI dropped by nearly 11 per cent