Houthi militants struck two Saudi airports on Wednesday, killing three people, as a widening Middle East conflict threatens to disrupt oil supply further. Brent crude topped $104 a barrel while Washington reportedly weighs new strikes on Iran ahead of the US midterm elections.
Iran-aligned Houthi militants in Yemen have claimed responsibility for attacks on airports in the Saudi cities of Abha and Riyadh that killed three people on Wednesday, Saudi officials said. The strikes mark the latest escalation in a conflict that is threatening to further disrupt oil supply flows out of the region.
Supply risk mounts around Bab el-Mandeb
Critical infrastructure across Saudi Arabia, including oil and military assets, has been targeted in recent days, as coalition forces in Yemen push a new ground and air offensive to retake territory from the Houthis. The rebels had previously held areas near the Bab el-Mandeb Strait, a chokepoint Saudi Arabia has relied on as an alternative route since Iran's effective closure of the Strait of Hormuz. Coalition forces recaptured several areas close to the strait earlier this week, officials told AP.
Energy prices have stayed elevated since the US and Israel launched a joint assault on Iran in late February, after which Tehran all but shuttered Hormuz, a conduit that had carried roughly a fifth of the world's oil and LNG before the war. Industry executives told Reuters that accessible oil storage is now running low, which is likely to place more upward pressure on prices.
Brent tops $104 as tanker attacks spread
Brent crude topped $104 a barrel, up $4 on the day, as attacks on tankers near Hormuz added to supply worries.
Attacks on tankers transiting the strait hit their highest weekly total last week since the war began on 28 February, and a tanker was hit multiple times near Qatar on Wednesday. According to Reuters, Global Risk Management chief analyst Arne Lohman Rasmussen said the attack "marks a new escalation."
Adding to the squeeze, US oil producers halted output and evacuated workers in the Gulf of Mexico ahead of tropical storm Isaias, with Shell and Chevron both shutting down production.
Pentagon weighs new strikes on Iran
The White House has asked the Pentagon to draw up options for strikes against Iran before the US midterm elections, raising concern that the recent period of relative de-escalation could be ending. The Pentagon has also instructed US Central Command to complete preparations for potentially resuming major combat operations, though no final decision has been made.
Analysts say the key risk is what happens next: de-escalation could quickly unwind part of the geopolitical risk premium and push oil lower, while a prolonged standoff could keep the premium elevated and drive oil significantly higher.
Sources: Economy News (AP), The Guardian, Investinglive
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