Oil prices experienced a significant uptick on Tuesday, with Brent crude futures reaching a five-month zenith. This surge is largely attributed to a heightened geopolitical risk premium, fueled by recent Houthi attacks on Saudi Arabian infrastructure and reported assaults on vessels in the Gulf.
Yemen's Iran-aligned Houthi rebels claimed responsibility on Monday for launching multiple strikes targeting Saudi energy facilities, airports, and military installations. Among the claimed targets were an Aramco site in Yanbu, the Shaybah oilfield, and the King Khalid International Airport in Riyadh, as well as Abha airport. Saudi authorities have not yet confirmed these claims, and independent verification remains pending.
Brent crude futures climbed to $111.05 per barrel, marking the highest level since May, and were trading at $110.80 as of 0810 GMT, reflecting a 1.1% increase. Concurrently, US West Texas Intermediate (WTI) crude futures reached $104.94, their highest point since September, before settling at $104.80, also up 1.1%.
Analysts at ING noted that oil prices are "well-supported," indicating that the market is factoring in substantial volatility and risk. They cautioned, however, that this risk premium could gradually diminish if shipping routes remain largely unhindered, though there are currently no signs of such a development.
Data from shiptracker Kpler revealed that at least 18 vessels have reportedly been attacked over the past two weeks, contributing to the sustained elevated risk premium in oil prices. Adding to the regional instability, a Houthi attack on a training camp for government security forces in Yemen's Shabwa province on Monday resulted in the deaths of 58 people and injured over 200.
These escalating attacks have amplified concerns about regional stability and underscored the persistent threats to energy supply originating from the area, consequently keeping oil prices above the $100 per barrel mark. Meanwhile, in the United States, preliminary data from a Reuters poll released on Monday suggested an expected decline in crude oil stockpiles and product inventories for the previous week.
