Oil Prices Jump as Houthi Attacks Raise Saudi Supply Risks

The Yemeni Houthis have struck Saudi Arabia’s southern province of Najran in the latest flare-up of Middle Eastern hostilities, killing 11 civilians, Reuters has reported, citing a spokesman for the military coalition led by Saudi Arabia that fights the Houthis in Yemen.

The news comes on the heels of reports that Iran is considering a ban on U.S., Israeli, and other “hostile” vessels in the Strait of Hormuz and fining ships that violate the ban with a sum equal to 20% of the cargo’s value. From other vessels, Iran plans to ask for passage fees of between $5% and 7% of the cargo’s value.

The reports pushed oil prices higher today, with Brent crude recovering above $80 and trading at $83.80 per barrel at the time of writing. West Texas Intermediate also rebounded, trading at $78.33 per barrel earlier today.

In its report on the Houthi attacks, Reuters cited a senior Saudi official as saying the Houthis and Iran-affiliated Iraqi groups were planning to launch a coordinated attack on Saudi civilian targets, notably energy infrastructure and ports. This would further complicate the energy export situation in the Middle East as peace remains highly elusive.

The Houthis are also targeting Saudi tankers in the Red Sea, with two vessels struck over the past week, lending additional support to oil prices. The Houthis themselves reported on Thursday an attack on Saudi troops in Yemen, which suggests that war is heating up yet again as well.

The latest events come after U.S. Treasury Secretary Scott Bessent earlier in the week said a deal was within reach and oil flows via Hormuz could resume as early as Wednesday. Instead of that happening, hostilities are escalating.

“Despite clear signs of progress in recent days, the tenor of the rhetoric and growing distrust between the US and Iran mean things could go from bad to worse once again,” ING commodity analysts wrote in a note earlier today.

Source: Oilprice