Saudi airport cancellations mount after deadly Houthi strikes

On Monday, October 12, crude oil prices experienced a slight decline as traders weighed steady Gulf exports against growing regional tensions and a US claim that Russia and Ukraine had reached an energy ceasefire. Brent crude fell beneath $103 per barrel, while West Texas Intermediate hovered around $90. The price dip provided a temporary respite to other commodities.

However, violence persisted in the West-Asia region. Saudi Arabia's primary airport suffered another attack on Sunday, and an additional vessel was targeted in the Strait of Hormuz. Despite these incidents, crude oil continued to flow through the waterway. According to JPMorgan Chase, Persian Gulf exports stood at 17.5 million barrels a day, or 98% of pre-war levels.

The recent Saudi strike followed a Saturday assault that resulted in 12 deaths. The kingdom's foreign minister reportedly held a conversation with his Iranian counterpart prior to the latest attack. The Houthis launched their campaign against Saudi Arabia in July, targeting energy facilities and Red Sea tankers. Saudi-backed forces in Yemen have been striving to regain control over Houthi-occupied regions. Yanbu on the Red Sea remains a critical pressure point.

France announced plans to dispatch soldiers, radars, and defense systems to safeguard the terminal. For now, Riyadh has revived pipeline operations to an approximate 3.5 million barrels per day. Meanwhile, Russia and Ukraine have supposedly agreed on an energy ceasefire, with US President Donald Trump asserting that he brokered a deal with Russian President Vladimir Putin to allow Russian diesel on the market.

Critics from both US political parties have raised concerns about the plan, while Ukrainian President Volodymyr Zelenskyy has firmly opposed it, arguing that the additional income would enable Moscow to fund its ongoing war. Russia is set to supply 300,000 tonnes of diesel immediately, 500,000 tonnes in November, and 1 million tonnes thereafter. The US Treasury Department has partially lifted sanctions on Russian diesel through April 2027.

Despite the recent developments, diesel prices have soared globally. The International Energy Agency (IEA) has called for prompt action and urged governments to accelerate their diesel releases. The IEA's executive director, Fatih Birol, has emphasized the need for increased supplies. The IEA's governing board is scheduled to meet on October 15. Currently, Brent crude still trades above $100.