Houthi Strikes on Saudi Arabia Push Oil Past $110 a Barrel

At least one person died and eight were wounded at a civilian airport in Dammam on Wednesday, when Yemen’s Iran-aligned Houthis struck several targets inside Saudi Arabia. Two more people died in a drone attack on a Saudi oil field. By Thursday, Washington had ordered diplomats and their families to leave.

Brent crude futures rose $1.29, or 1.2%, to $110.11 a barrel at 00:34 GMT. U.S. West Texas Intermediate gained 97 cents, or 1%, to $98.12.

The Security Picture

The U.S. Embassy in Riyadh issued a security alert warning of possible further Houthi attacks on Saudi Arabia after what it called recent deadly strikes, including at Riyadh’s airport. Three U.S. officials said the State Department was preparing to order some personnel and family members to leave embassies across the Gulf region over a possible resumption of hostilities, particularly with the Houthis. Two officials said departures could include all personnel and families at the U.S. Mission to Saudi Arabia.

The Houthis aren't the only front. Iran’s state media reported several explosions on Wednesday in the Karpan area of Sirik, in southern Hormozgan province overlooking the Strait of Hormuz. IRNA said, “local sources have not yet disclosed the nature of these explosions.” Iranian media also reported blasts in Sirik, with their origin unknown.

At sea, Reuters counted at least 18 attacks on shipping over the past two weeks, citing Kpler data. LSEG analysts warned that Iran was targeting tankers well beyond the Strait of Hormuz, reaching into the Gulf of Oman and putting Gulf crude loadings and the ship-to-ship transfers that support them at risk.

Diplomatic Dead End

Tehran’s public posture offers little sign of de-escalation. Foreign Minister Abbas Araqchi told the Financial Times that Iran was fully prepared to defend itself. President Masoud Pezeshkian told state media the United States couldn't expect dialogue while blockading and threatening Iran. Iranian exports remained constrained by the U.S. blockade, according to the report.

The Gulf Adapts, at a Price

The volumes tell a more resilient story than the headlines. Kpler data showed Middle East crude exports excluding Iran averaged 24.6 million barrels per day in the week to Oct. 18, against a pre-war average of 23.3 million. “The volume recovered. The route did not,” Kpler said.

The rerouting is substantial. Kpler’s September analysis found 40% of regional crude exports bypassed Hormuz, compared with 17% before the war, when about 83% crossed the strait. In September, about 9.9 million barrels per day, or 60%, still crossed Hormuz. Another 23% loaded outside the strait, primarily at Fujairah in the UAE, and 17% moved through Saudi Arabia’s Red Sea export network.

Saudi Arabia raised shipments through its 1,201-kilometer East-West Pipeline, known as “Petroline,” to Yanbu on the Red Sea. The UAE ramped up its 406-kilometer Habshan–Fujairah pipeline, which bypasses Hormuz. Producers without comparable routes stayed dependent on the strait.

A tanker shuttle system has filled the gaps. Vessels load inside the Gulf, cross Hormuz with their automatic identification system switched off, then transfer cargo near Fujairah or Sohar. More than 70% of crude that crossed Hormuz in August changed tankers offshore, according to Kpler. The practice makes shipments harder to trace, and analysts caution that estimates may be revised.

The International Energy Agency took a more cautious view, putting September Gulf crude exports at 13.9 million barrels per day, more than 75% of pre-war levels. Gulf News said the IEA stressed that the recovery came at a cost: attacks on shipping and the threat of escalation raised freight rates and war-risk insurance premiums. The Financial Times reported tanker charter rates and premiums had surged, leaving alternative routes expensive and vulnerable to further attacks.

Pressure at the Pump and the Pipeline

U.S. crude stocks fell by 3.06 million barrels to 412.5 million barrels last week, the Energy Information Administration said, far beyond the 820,000-barrel draw analysts expected. The Trump administration offered to loan up to nearly a third of the 1-million-barrel U.S. emergency heating oil reserve, the Department of Energy said, seeking to contain prices that had surged on diesel shortages tied to the wars in Iran and Ukraine.

Separately, Russian President Vladimir Putin hosted U.S. Special Envoy Steve Witkoff in St Petersburg on Wednesday. The Kremlin said Putin agreed to resume U.S.-mediated peace talks with Ukraine as soon as next month.

Why This Matters: The Gulf can still export while under fire. But that depends on improvised workarounds, pipelines with finite capacity and tankers running dark. Each new Houthi or Iranian strike on a Saudi airport, oil field or tanker raises the insurance and freight bill consumers eventually pay. From a security standpoint, the order pulling U.S. diplomatic families from Gulf missions signals that Washington takes the threat of resumed hostilities seriously. Tehran won't talk under blockade, while an Iran-aligned proxy attacks civilian infrastructure, leaving little room for the quiet diplomacy that might lower the temperature.