Oil prices hit five-month high as Houthi escalation worsens supply and inflation fears
Oil prices hit a five-month high on Tuesday after the Iran-backed Houthi rebels in Yemen continued attacking Saudi Arabia, further stoking concerns over supply and higher inflation that could prompt interest rate increases. Brent, the benchmark for two thirds of the world's oil, was trading 1.52 per cent higher at $111.30 per barrel at 2.27pm UAE time. West Texas Intermediate, the gauge that…
Oil prices surged to a five-month high on Tuesday following continued attacks by Iran-backed Houthi rebels in Yemen on Saudi Arabia. This escalation heightened concerns about potential supply disruptions and rising inflation, which could lead to interest rate hikes. Brent crude, a global benchmark, rose 1.52 percent to $111.30 per barrel, while West Texas Intermediate increased 2.30 percent to $100.80 a barrel.
These prices not seen since mid-May. The Houthi group claimed responsibility for six attacks on Saudi energy, airport, and military sites on Monday. These strikes included assaults on King Khalid International Airport in Riyadh, a military base near Abha, a naval task-force camp, and a radar station in Bir Askar. The ongoing US-Iran conflict has strained Middle Eastern crude supplies, prompting the International Energy Agency to agree to release over 20 million barrels of diesel into the market.
Gulf oil producers have also accelerated tanker transfers to India and lowered prices to maintain crude flow to Asia. The conflict has kept energy prices elevated, increasing inflation and raising the likelihood of another Federal Reserve interest rate hike, which is set to occur soon. Analysts now anticipate a second consecutive increase as Fed officials aim to curb inflation.
The Strait of Hormuz, previously carrying a fifth of global energy exports, remains under pressure, limiting ship movements. US Energy Secretary Chris Wright announced willingness to permit sanctioned oil tankers to start shipping legally. However, only 24 of the nearly 160 sanctioned vessels could resume mainstream trade, given age and ownership restrictions.
Wholesale diesel prices already exceeded $200 per gallon in Singapore and were around $220 in Europe and the US, according to the Paris-based IEA.
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