Can you embed a Youtube video in custom blocks?

I'd like to put a youtube video above my chatbox so during official streams members can chat and watch at the same time. But links and the youtube embed link doesn't seem to show anything

You could use a WYSIWYG block then paste the link of the YouTube video in the editor. That will behave just like anything else with the WYSIWYG editor. 

That worked, thanks but the video is huge. Is there a way to have the Youtube but a smaller size?

It follows the same restrictions as posts so you would need to change those in ACP > System > Posting. Alternatively, you may need to use your own custom HTML by enabling the ability to use HTML for your admin group. (Be sure to only provide that to individuals you completely trust as they can perform malicious acts using that)

Thanks Jim. I managed to get is sorted by click source in the editor.