Global oil prices have surged, with Brent crude reaching its highest level in over five months due to escalating tensions in the Middle East. The rise follows Houthi attacks in Saudi Arabia, sparking fears over potential disruptions to energy supplies from the region.
Brent crude futures increased by 0.7% to $113.96 per barrel, after peaking at $114.72, marking the highest since May 4. Meanwhile, US West Texas Intermediate (WTI) crude saw a 1.1% rise, trading at $100.57 per barrel. Brent is on track for a third consecutive weekly gain of nearly 4%, while WTI is anticipated to end the week with a slight decline of about 0.8%.
Concerns intensified after reports indicated that Saudi Aramco ordered the evacuation of its headquarters in Dhahran amid escalating conflict involving Saudi Arabia and Yemen-based Houthi forces. Analysts caution that further hostilities could disrupt oil shipments, exacerbating existing supply shortages. The situation has led to uncertain shipping routes, volatile oil flows, and elevated freight costs, adding pressure to the global energy market.
The conflict also poses risks to the Bab el-Mandeb Strait, a crucial shipping route connecting the Red Sea with the Gulf of Aden. Prolonged disruptions here could delay energy deliveries and keep oil prices elevated. Additionally, supply issues have emerged in Libya, where the closure of a pipeline valve connecting the Hamada and Tahara oilfields to Zawiya port has curtailed production.
In contrast, a Malta-flagged tanker carrying 40,000 metric tons of Russian diesel is heading towards New York, as Russia resumes diesel exports to international markets, including the United States, in efforts to alleviate fuel-price pressures.
Oil markets are expected to remain highly sensitive to developments in the Middle East, the impact of shipping disruptions, and the time needed to restore affected energy operations.