— This is the script of CNBC's news report for China's CCTV on March 26, Thursday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Oil prices have surged on growing conflict in Yemen.
Brent crude oil prices shot up nearly 6 percent on Thursday after Saudi Arabia and its Gulf Arab allies began a military operation in Yemen, although Asian importers said they were not immediately worried about supply disruptions.
The strike against Iran-backed Houthi rebels who have driven the president from the country's capital could stoke concerns about the security of oil shipments from the Middle East.
Oil prices jumped as traders saw the attacks as the latest incident in a conflict that is spiraling out of control in the world's richest oil region.
CNBC's contributor Brian Kelly tells us why Yemen is so important for oil shipments in that region.
[Brian Kelly, CNBC Contributor] "So this conflict in Yemen has been going on for a while, but what are the events that happened in the last couple days. Actually two events - one, the president fleeing today. But more importantly, Saudi Arabia, which is right here, massing troops along the border. Well, you don't talk about Yemen that much, but look at where it's located. That's the most important thing. The Gulf of Aden, and the red sea. Here is the Persian gulf, which is 17 million barrels a day of oil thats coming out of the Persian gulf. Most goes to Asia, but a good portion of it comes to the Gulf Aden, up the Red Sea, over here to the suez canal. So, if you have conflict here, you not only have an unfriendly government and conflict in Yemen, but you also have Somalia, which is also on the Gulf of Aden. If anybody watches Captain Phillips, you know the Pirates issues that they have right here. So these chill points, this chill point and this chill point, are what oil analysts are concerned about. I talked earlier in the show, about the potential geopolitical risk would increase the price of Brent, this, all this oil goes up to Europe, so this is the Brent and Europe event. You know, it's a tail risk, but it's really heating up, and absolutely something that investors should keep an eye on."
On the other hand, talk of progress in the nuclear negotiations between Iran and the world powers has had oil traders on edge.
With large amounts of Iranian oil already in storage, an injection of hundreds of thousands of barrels a day into the oil market already struggling with a crude overhang could depress prices further.
Back to Yemen, analysts say the current military action may put Iran and Saudi into a big confrontation position, and we may also see the spread between Brent and WTI oil prices going higher in the short term.
CNBC's Qian Chen, reporting from Singapore.