Oil prices surge as attacks on Saudi Arabia threaten Middle East supplies

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Oil prices surge

Highlights

Brent futures rise 3.39% to $112.5 a barrel.
Houthi attacks raise Saudi oil supply risks.
Hormuz threats keep global energy markets tense.

December Brent crude futures rose 3.39%, to $112.51 a barrel, while December WTI futures gained 2.90%, to $99.97. According to Reuters, prices climbed as renewed Houthi attacks on Saudi Arabia and threats to shipping in the Strait of Hormuz heightened fears of further disruptions to Middle Eastern oil supplies.

Saudi attacks deepen supply concerns

Yemen's Iran-aligned Houthis struck several locations in Saudi Arabia on Wednesday, including civilian and energy facilities. An attack at an airport in Dammam killed at least one person and injured eight others, while a drone strike on an oil field left two people dead.

Saudi Aramco subsequently instructed employees at its headquarters in Dhahran to evacuate and work remotely. The U.S. State Department also ordered some diplomats and their families to leave Saudi Arabia, underscoring concerns about further attacks.

Shipping threats and production losses

Security risks around the Strait of Hormuz remain central to oil market concerns. Iran's Islamic Revolutionary Guard Corps Navy claimed that four vessels involved in unauthorized oil transfers had been struck and caught fire, while three additional ships encountered mines west of the strait. Those claims have not been independently verified.

Morgan Stanley estimated that Middle Eastern crude exports reached approximately 17 million barrels per day last week. However, stronger export volumes have offered limited reassurance as attacks threaten transportation routes and production facilities.

Additional supply pressure emerged in Libya, where a pipeline valve closure reduced output from the Hamada and Tahara oil fields. The disruption adds another source of uncertainty for traders assessing available crude supplies.

Higher energy costs threaten inflation outlook

The latest rally comes amid persistent diesel shortages linked to the Middle East conflict and the war in Ukraine. Washington has offered to lend nearly one-third of its 1-million-barrel emergency heating oil reserve to ease pressure on fuel markets.

Elevated crude prices could increase transportation and manufacturing costs, complicating efforts by central banks to control inflation. Even where production remains available, uncertainty surrounding shipping routes and regional infrastructure can sustain a substantial risk premium. Without a durable improvement in security, energy markets may remain vulnerable to further price spikes.

As we previously reported, U.S. stock futures slide as tech losses and Iran tensions rattle markets.

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