Oil Prices Jump as Houthi Attacks Raise Saudi Supply Risks

Oil prices have surged recently due to the Houthis' attacks on Saudi Arabia, raising concerns about potential disruptions to the country's oil supply. The Yemeni rebels struck the southern province of Najran, resulting in the deaths of 11 civilians, according to Reuters. The Houthis and their Iranian-affiliated Iraqi allies reportedly plan a coordinated assault on Saudi civilian targets, particularly energy infrastructure and ports.

This development adds to the growing instability in the Middle East, complicating the already challenging energy export scenario.

Furthermore, Iran has been contemplating a ban on U.S., Israeli, and other hostile vessels in the Strait of Hormuz, imposing fines equivalent to 20% of the cargo value for ships violating the ban. Ships seeking passage would face fees ranging from 5% to 7% of the cargo's value. These reports have contributed to the upward movement of oil prices, with Brent crude surging above $80 and trading at $83.80 per barrel, while West Texas Intermediate also rose, trading at $78.33 per barrel.

A senior Saudi official revealed that the Houthis and Iranian-affiliated groups are reportedly plotting a coordinated attack on Saudi civilian targets, which could further impede energy exports from the Middle East. In addition, the Houthis have targeted Saudi tankers in the Red Sea, with two vessels attacked in the past week. This aggression has added to the pressure on oil prices, which have been on the rise.

The conflict escalated after U.S. Treasury Secretary Scott Bessent announced earlier in the week that a deal was close, and oil flows via Hormuz could resume by Wednesday. However, hostilities have continued, casting doubt on the prospects for a swift resolution. According to ING commodity analysts, the recent events and the tense relationship between the U.S. and Iran could lead to further deterioration in the situation.