Oil hits multi-week highs after Houthi attacks on Saudi energy facilities

Oil prices surged to multi-week highs on Tuesday following attacks by Iran-backed Houthis on Saudi energy facilities and Iran's threat of economic warfare against the United States. Brent crude futures rose 1.43% to $98.39 a barrel, while US West Texas Intermediate crude increased 2.46% to $93.73 a barrel. Brent had previously reached $99.46, its highest level since July 24, and WTI hit $94.73, its highest since June 8.

The price surge is attributed to both genuine physical tightness, with tanker flows through the Strait of Hormuz remaining far below normal, and a significant geopolitical risk premium. Analyst Tim Waterer from KCM Trade stated that the risk premium is currently driving the market. Saudi Arabia, the world's top oil exporter, halted operations at some energy facilities after the attacks, which resulted in 73 injuries.

Iran also threatened the US with economic warfare and reportedly fired an advanced missile at US warships. In response, the US struck three Iranian oil tankers, including one near Kharg Island, Iran's primary oil export hub. The Strait of Hormuz, which handles about one-fifth of global daily oil and liquefied natural gas supplies, experienced slower shipping traffic after Iran threatened retaliation for any new US attacks.

Goldman Sachs raised its forecasts for Brent and WTI prices for December 2026 and 2027, respectively, due to its belief that Middle East shipping disruptions will persist into 2027. Tight global diesel supply, due to a lack of spare refining capacity, Russia's ban on exports, and the approach of peak winter demand, is expected to keep refined-product markets tighter than the crude market.