Brent crude tops $114 as Saudi, Libyan supply risks escalate
Brent crude climbed to $114.00 a barrel and WTI crude rose to $100.40, as Houthi attacks on Saudi infrastructure and a Libyan pipeline shutdown fuelled a sharp weekly rally in oil prices.
The weekly gain put Brent on track for roughly $6 a barrel higher, while WTI moved from about $99 on Monday to above $100. Saudi Aramco ordered staff to evacuate its Dhahran headquarters, a sign the Houthi group may now be able to strike further into Saudi territory than during earlier attacks limited to the Red Sea and Saudi Arabia’s Red Sea ports.
In Libya, the National Oil Corporation reported the shutdown of a pipeline carrying crude from two fields to the Zawya export terminal, forcing output cuts at both fields and adding further upward pressure on prices.
ING commodity strategists Warren Patterson and Ewa Manthey said markets are increasingly concerned about renewed escalation in the Persian Gulf that could threaten oil flows that have so far held up well. They pointed to reports that the US administration is weighing fresh strikes on Iran and is reinforcing its regional military presence with a second aircraft carrier.
The strategists said this risk undercuts expectations of an easing of tensions after next month’s US midterm elections, and ING revised its fourth-quarter Brent price outlook after concluding its earlier $80-a-barrel average forecast was, in their words, “unattainable.”
Separately, reports pointed to rising incidents involving vessels in the Strait of Hormuz and renewed Houthi strikes on Saudi oilfields, including Aramco’s Shaybah field, which Saudi officials said killed four people and wounded eight. Iran’s Revolutionary Guard navy said several tankers were hit or struck mines in the strait.
Why it matters for markets: A sustained rise in Brent crude and WTI crude raises input costs across economies reliant on imported energy, which can feed into inflation expectations and pressure central bank rate paths. Escalation risk in the Persian Gulf and Strait of Hormuz also tends to boost demand for the US dollar and safe-haven assets such as gold, while weighing on equity sectors sensitive to energy costs.
Sources: OilPrice.com; Report.az (business); FXStreet