Brent crude hits more than five-month high on concern over Middle East escalation

Oil prices surged on Friday, reaching a five-month high, due to worries over potential supply disruptions in the Middle East following Houthi strikes in Saudi Arabia. Brent crude futures surged $1.40, or 1.2%, to $114.57 a barrel, climbing to $115 for the highest level since May 4. US West Texas Intermediate crude also increased $1.48, or 1.5%, to $100.95.

The Brent benchmark is on track for a third consecutive weekly rise of 4.2%, while WTI is expected to finish down 0.5% for the week. Saudi Aramco ordered the evacuation of its headquarters in Dhahran on Thursday as fighting between the world's largest crude exporter and Houthi forces in Yemen intensified. UBS analyst Giovanni Staunovo warned that the market remains anxious about a possible escalation, which could lead to renewed supply disruptions in a worst-case scenario.

The ongoing clashes between Houthi rebels and a Saudi-led coalition backing Yemen's recognized government, along with the threat of supply interruptions, have left the market undersupplied. Analyst Linh Tran emphasized that the key factors to watch now are the extent of actual disruption and the time needed for restoration, as these will ultimately determine the supply risk premium the market is willing to pay.

If attacks continue and deliveries are delayed, elevated prices will have a stronger foundation. An oil spill was detected off the coast of Umm Al Quwain, prompting containment efforts and environmental assessments by the UAE Ministry of Climate Change and Environment. The cause and identity of the tanker were not disclosed. In Libya, an oil pipeline valve from the Hamada and Tahara oilfields to Zawiya port was closed, causing a reduction in production at both fields, according to the head of the National Oil Corporation.

Additionally, the first Russian diesel headed for the US since a surprise agreement between Russia and US President Donald Trump is now aboard a tanker bound for New York, as per ship-tracking data. Trump announced the deal earlier this month as part of his efforts to lower diesel prices ahead of the US midterm elections next month.