Houthi Claims on Saudi Targets Push Oil to Five-Month High

Oil prices hit a five-month high on Tuesday after Yemen’s Iran-backed Houthis claimed further attacks on Saudi energy, airport and military targets, raising regional tensions and concerns about supplies. Brent crude stood at $111.20 a barrel in one market snapshot, up 1.46 per cent. At 2.27pm UAE time, Brent had climbed 1.52 per cent to $111.30, while US benchmark West Texas Intermediate rose 2.30 per cent to $100.80.

The moves followed Houthi claims of attacks on Saudi targets. The group said it had carried out six attacks on the kingdom and claimed more strikes on Monday. It named 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 heightened regional tensions and weighed on Gulf stock markets.

Claims on Saudi Targets

The Houthis named targets across aviation, military and energy infrastructure. The account reports the group’s claims, but doesn’t independently confirm that the strikes hit those sites. Attacks and rising tensions put pressure on Gulf markets and raised concerns about the movement of oil and other energy supplies.

Brent reached $110 on Friday for the first time since May, while WTI topped $100 for the first time in a month. Both benchmarks last traded at comparable levels in mid-May. Tuesday’s market snapshot put Brent at $111.20; a later reading at 2.27pm UAE time showed $111.30. WTI stood at $100.80 in that later snapshot.

Supply Routes Under Pressure

The Strait of Hormuz remained under pressure as crude supplies from the Middle East faced constraints tied to the US-Iran conflict. Before the war, the strait handled a fifth of the world’s energy exports. Gulf oil producers pushed tanker transfers as far as India’s coast and cut prices to keep crude flowing to Asia, while congestion and persistent attacks strained the makeshift export network around the strait.

The International Energy Agency agreed to release more than 20 million barrels of diesel to the market as diesel prices rose. The Paris-based agency said last week that wholesale diesel had surpassed $200 per gallon in Singapore and reached roughly $220 in Europe and the United States. Energy supply concerns and high prices persisted.

Inflation and Oil Shipping

Higher energy costs stoked inflation concerns and strengthened 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 Monday that the United States was willing to let sanctioned oil tankers begin a process to ship crude legitimately. Analytics firm Kpler said easing sanctions on the shadow fleet wouldn’t do much to change record freight rates. Kpler estimated that, as of Monday, 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 age and ownership restrictions.