Houthi Attacks on Saudi Arabia Drive Oil Prices Higher Amid Supply Concerns

Oil prices experienced an increase on Friday following a fresh series of attacks by Yemen

Oil prices saw an uptick on Friday as Yemen’s Houthi rebels launched another wave of attacks targeting Saudi Arabia, raising concerns about potential disruptions to supplies originating from the Middle East. The benchmark Brent crude was trading 1.1 percent higher at $114.50 a barrel by 10:21 AM UAE time. Concurrently, West Texas Intermediate (WTI), which serves as a benchmark for US crude, climbed 1.3 percent to $100.80 a barrel. Brent, having settled at its highest point since May 4 on Thursday, is poised to conclude the week with gains for the third consecutive week, while WTI is on track for a weekly decline.

“Oil prices continue to be bolstered by geopolitical risks, with both Brent futures and WTI holding onto substantial overnight gains,” stated Edward Bell, head of research at MUFG, and Soojin Kim, a research analyst at the same group. The report also noted that non-Iran Middle East oil exports have returned to pre-war levels, with alternatives to the Strait of Hormuz being utilized. Houthi militants have claimed responsibility for an attack on the oil loading port at Yanbu in Saudi Arabia, as well as assaults on Aramco facilities and Dammam airport in recent days. Despite these incidents, production and export flows through the Strait of Hormuz remain close to pre-conflict levels, albeit with elevated shipping rates.

Saudi Arabia has been subjected to persistent attacks from the Iran-backed Houthis. Last month, the group made significant advances along Yemen's Red Sea coast, nearing the Bab Al Mandeb strait, a critical chokepoint for global crude oil transportation. The Houthis have asserted responsibility for attacks on the Saudi Defence Ministry headquarters in Riyadh, King Fahd International Airport in Dammam, an Aramco site in Yanbu, and Abha International Airport within the past 48 hours.

Developments in Libya, a member of OPEC, are also influencing oil prices. Production in the North African nation was curtailed following the closure of an oil pipeline valve that connects the Al Zawiya refinery with the Hamada and Tahara oilfields. According to a statement from Libya’s National Oil Corporation (NOC) published on Facebook, individuals accessed the crude receiving station near the refinery and shut the valve. This pipeline is operated by the Arabian Gulf Oil Company, a subsidiary of the NOC. Libyan crude is considered valuable in global markets, especially as supply disruptions persist due to the effective closure of the Strait of Hormuz. Many European nations rely on imports from Libya, with the country's production capacity estimated at approximately 1.4 million barrels per day.