Oil prices increased at the start of trading on Friday, driven by concerns over potential supply disruptions following an escalation of attacks by Yemen's Houthis on Saudi Arabia. This has put prices on track for a fourth consecutive monthly gain, the largest since July. Brent crude futures rose 86 cents, or 0.75%, to $115.74 per barrel, while US West Texas Intermediate crude futures increased by 72 cents, or 0.71%, to $102.72 per barrel.
The recent attacks by Houthis on Saudi Arabia have raised concerns about potential disruptions to oil supplies. The Houthis claimed they had launched attacks on several sites in Saudi Arabia, including the Ras Tanura refinery, the largest in the kingdom, the Rabigh refinery, and a facility belonging to state oil company Aramco in Buqayq. The Saudi-led coalition reported that it had intercepted a cruise missile launched by the Houthis towards the western region of the kingdom.
The ongoing conflict in the region has led to increased concerns about oil supply security. According to Sol Kaunetich, head of energy research at MST Marquis, the continuation of military operations near the Strait of Hormuz, coupled with doubts about a viable diplomatic path, keeps oil prices elevated in anticipation of further escalation in the coming weeks.
The situation has also drawn attention from major oil companies. ExxonMobil and Chevron have reportedly canceled plans to send executives to the largest oil exhibition in the United Arab Emirates next week due to security concerns in the region. This development highlights the growing unease among major players in the oil industry about operating in areas affected by conflict.
The impact of the conflict on oil prices is being closely watched by market participants. On a monthly basis, Brent crude is set to gain around 14%, while US crude is expected to rise by about 15%, marking the first time since April that both have closed above $100 per barrel.
The situation in the region remains complex, with various factors influencing oil prices. US President Donald Trump stated that his vice president, Mike Pence, had contacted Iran to assist in obtaining medical supplies. However, Iran has indicated that it wants the US to meet its conditions and has deemed any stance conflicting with this framework as unacceptable.
The security concerns in the region have also affected other aspects of the oil market. Three tankers were reportedly damaged by naval mines and caught fire while attempting to navigate through an unauthorized route south of the Strait of Hormuz, according to the Iranian Revolutionary Guard.
Key points
- The ongoing conflict in Yemen and the Middle East has driven oil prices up due to fears of supply disruptions.
- Major oil companies are taking precautions, with some canceling plans to attend a major oil exhibition in the UAE due to security concerns.
- The situation is complex, with geopolitical factors and supply concerns continuing to influence oil prices.
