Oil prices rose more than 5% as attacks on shipping in the Persian Gulf combined with renewed tensions over Saudi Arabia and the threat of a hurricane disrupting U.S. output. Brent crude hit $105.20 a barrel, while U.S. West Texas Intermediate rose to $92.75.
A second front is already forming in the market in the Iran war. While the main risk remains in the Strait of Hormuz, the Tehran-backed Houthis in Yemen are stepping up pressure on Saudi Arabia. Explosions were heard in Riyadh and the Houthis said they had attacked King Khalid International Airport. The Saudi-led coalition said it had intercepted two ballistic missiles aimed at the capital and another at Khamis Mushait.
US and Syrian officials quoted by Reuters said Syria was considering providing military assistance to Saudi Arabia. Options under consideration include defensive support or sending forces to help Saudi partners in Yemen. No final decision has been made.
Oil routes hit
The risk to supplies is increasing because the attacks are targeting multiple routes at once. The Saudi East-West pipeline, which carries oil to Red Sea ports, was damaged in attacks on pumping stations. Saudi officials said capacity had been restored to 5.8 million barrels per day, but the full sustainability of the route remains a question for the market.
Another option is for oil to be exported from terminals on the east coast. In that case, tankers would have to pass through the Strait of Hormuz, where attacks on ships have reached their highest level since the start of the war. Before the conflict, the waterway carried about 20% of the world's oil and fuel supplies.
“The frequency of Iranian attacks on ships is now the highest since the start of the war and is likely to increase further,“ said Saul Kavonik, head of energy analysis at MST Marquee. According to him, limited supplies of petroleum products, high logistics costs and the risk of a new escalation are keeping prices high.
Pressure also from American production
Adding to the geopolitical risk was Hurricane Isaias, which headed for the production areas in the Gulf of Mexico. Companies such as Shell and Chevron have limited their offshore operations. According to data from the US Marine Resources Management Service, about 25.08% of current oil production and 16.37% of natural gas production in the area have been stopped.
The International Energy Agency accelerated the release of reserves and prioritized diesel supplies after governments sought a way to limit the effects of high prices and disrupted supplies. The U.S. Energy Information Administration also reported a 3.2 million barrel decline in crude inventories to 424.1 million barrels.
“Renewed tensions in the Middle East and attacks on vessels outside the Strait of Hormuz itself have revived concerns about the sustainability of higher volumes passing through the narrow route,“ said UBS analyst Giovanni Staunovo. The next test for the market will be whether Saudi export routes remain operational and whether attacks will spread to oil terminals, tankers and other infrastructure in the region.