Oil prices jump more than 2% after new strikes on Saudi, Strait of Hormuz

Oil prices surged over 2% on September 14th, 2022 following new Houthi strikes in Saudi Arabia and Iranian attacks in the Gulf, amplifying supply concerns in the aftermath of a key Saudi oil pipeline shutdown. Brent crude futures climbed US$2.90, or 2.77%, to US$107.51 per barrel, while WTI futures increased US$2.27, or 2.27%, to US$102.32 per barrel.

The sharp rise initially surpassed 3% at the market's opening bell. The Houthis claimed responsibility for an attack on Saudi Arabia's southern Jazan province, and later, an Iranian projectile struck a ship in the Strait of Hormuz, causing a fire and prompting crew evacuation. Iran reported one fatality and four wounded crew members.

The loss of the East-West oil pipeline, which supports up to 4% of global supply, added to the supply risks. Meanwhile, Houthi forces had reached the strategic island of Perim, intensifying control over the Bab el-Mandeb Strait, another vital oil transit lane. Oil prices had already risen 8% over the week due to these disruptions, breaching the US$100 mark for the first time since July.

Analysts expected crude oil prices to potentially reach US$119.48 if no operational resolution was reached following recent talks in Oman, or if the pipeline was not quickly restored.