Houthi Claims Spur Oil Fears as Brent Hits $111

Yemen’s Iran-backed Houthis claimed six more attacks on Saudi energy, airport and military targets on Monday, as Brent crude reached a five-month high and concern grew over regional supplies. Brent was up 1.52 per cent at $111.30 a barrel at 2.27pm UAE time. A separate market snapshot put it at $111.20, up 1.46 per cent.

Attacks and market reaction

The Houthis said they carried out six attacks on the kingdom. Their claims included strikes on King Khalid International Airport in Riyadh, a military airbase near Abha International Airport, a naval task-force camp and a Saudi radar in Bir Askar. The claims escalated regional tensions and weighed on Gulf stock markets.

West Texas Intermediate, the US crude benchmark, rose 2.30 per cent to $100.80 a barrel at 2.27pm UAE time. Brent benchmarks about two thirds of the world’s oil. Crude prices last reached comparable levels in mid-May. Brent hit $110 on Friday, its first time there since May, while WTI topped $100 for the first time in a month.

Pressure on energy supplies

The International Energy Agency agreed to release more than 20 million barrels of diesel amid rising prices. Wholesale diesel had passed $200 per gallon in Singapore and reached roughly $220 in Europe and the United States, the Paris-based agency said last week.

Gulf oil producers extended tanker transfers as far as India’s coast and cut prices to keep crude flowing to Asia. Those steps came as a makeshift export network around the Strait of Hormuz faced congestion and persistent attacks. Before the war, the strait handled a fifth of the world’s energy exports. Movement through it remains under pressure.

The US-Iran conflict also constrained crude supplies from the Middle East, prompting efforts to maintain global supplies. Attacks on Saudi targets added to concerns over regional tensions and oil-market flows.

Inflation and policy concerns

Higher energy costs stoked inflation concerns and raised expectations of another US Federal Reserve interest-rate increase at its meeting the following week. Analysts widely expected a second consecutive increase as Fed officials sought to contain inflation.

Duncan Oil analysts said: “Brent crude hovering near five-month highs following geopolitical tensions in the Middle East has reignited fears of sticky inflation.” They added: “Surging energy costs have led investors to believe the Fed will keep interest rates higher for longer to tame inflation.”

US Energy Secretary Chris Wright said on Monday the United States was willing to allow sanctioned oil tankers to begin a process to ship crude legitimately. Analytics firm Kpler said easing sanctions on the shadow fleet would have little effect on record freight rates. As of Monday, it estimated only 24 of nearly 160 vessels sanctioned by the Treasury Department’s Office of Foreign Assets Control could return to mainstream trade, after accounting for their age and ownership restrictions.