Global oil prices surged as Brent crude hit its highest level in over five months, driven by heightened concerns about potential disruptions to energy supplies from the Middle East. The escalation of conflict in the region, particularly Houthi attacks in Saudi Arabia, has intensified market fears. Brent crude futures rose by 0.7% to $113.96 per barrel, after reaching $114.72, the highest since May 4, while US West Texas Intermediate (WTI) crude increased by 1.1% to $100.57 per barrel.
These developments have put Brent on track for a third consecutive weekly gain of nearly 4%, although WTI is poised for a weekly decline of around 0.8%. The situation worsened after reports emerged that Saudi Aramco evacuated its headquarters in Dhahran due to escalating hostilities involving Saudi Arabia and Yemen-based Houthi forces.
Analysts have warned that further attacks could lead to significant disruptions in oil shipments, exacerbating supply shortages. The conflict has also raised alarms about the security of the Bab el-Mandeb Strait, a crucial shipping route connecting the Red Sea to the Gulf of Aden. Prolonged disruptions in this area could delay energy deliveries and maintain elevated oil prices.
Additional supply concerns in Libya have compounded the situation, where a pipeline valve shutdown connecting the Hamada and Tahara oilfields to Zawiya port has reduced production. Meanwhile, a Malta-flagged tanker carrying 40,000 metric tons of Russian diesel is on its way to New York, as Russia resumes diesel exports to international markets, including the United States, to alleviate rising fuel prices.
The oil markets remain sensitive to developments in the Middle East, with the extent of shipping disruptions and the time needed to restore affected energy operations being closely monitored. The ongoing uncertainty is expected to keep oil prices volatile in the near term.