Oil prices surge as Middle East conflict escalates and Aramco evacuates base
Oil prices rose on Friday, with Brent crude touching a more than five-month high, after Houthi attacks in Saudi Arabia stoked concern over further disruption to energy supplies from the Middle East. Brent crude futures gained $1.40, or 1.2 per cent, to $114.57 a barrel by 1138 GMT (4:38pm PKT), having earlier reached $115 for the highest level since May 4. US West Texas Intermediate crude gained $1.48, or 1.5pc, to $100.95. The Brent benchmark is on track for a third consecutive weekly gain, of 4.2pc, while WTI is poised to finish 0.5pc down on the week. Saudi Aramco on Thursday ordered the evacuation of its headquarters in Dhahran on the Gulf near Bahrain, Reuters reported, as fighting intensified between the world’s largest crude exporter and Yemen-based Houthis. “The market remains concerned about a potential escalation, which, in a worst-case scenario, could trigger renewed supply disruptions,” said UBS analyst Giovanni Staunovo, adding that volatile oil flows and elevated freight rates have left the market undersupplied. Clashes between the Houthis and a Saudi-led coalition that backs Yemen’s internationally recognised government have raged since the Houthis pushed towards Bab el-Mandab, a shipping chokepoint at the mouth of the Red Sea. “The key factors to monitor now are the extent of actual disruption and the time needed to restore operations, as these will ultimately determine how much of a supply risk premium the market is willing to pay,” said XS.com analyst Linh Tran. “If attacks persist and delay deliveries, elevated prices will have a firmer foundation.” An oil spill from a tanker was detected off the coast of Umm Al Quwain, prompting containment operations and environmental assessments, the United Arab Emirates Ministry of Climate Change and Environment said on Friday. The ministry did not say what caused the spill, and authorities have not identified the tanker involved. In Libya, an oil pipeline valve from the Hamada and Tahara oilfields to Zawiya port was shut, leading to a reduction in production at both fields, the head of the National Oil Corporation told Reuters on Thursday. Meanwhile, the first Russian diesel bound for the US since a surprise agreement between Moscow and US President Donald Trump is aboard a tanker heading for New York, ship-tracking data showed today. Trump announced the deal this month as part of his efforts to bring down soaring diesel prices ahead of US midterm elections next month.
Global oil benchmarks climbed on Friday as renewed hostilities in Saudi Arabia heightened fears of major supply bottlenecks across the Middle East. Brent crude surged to its highest mark in over five months, touching $115 per barrel before settling near $114.57, up $1.40 or 1.2 per cent, according to a report by Dawn via Reuters.
US West Texas Intermediate crude also gained ground, rising $1.48, or 1.5pc, to trade at $100.95. The movement puts Brent on course for a third straight weekly rise, gaining 4.2pc over the period, even as WTI remained positioned to end the week 0.5pc lower.
Market anxiety flared following Houthi strikes inside Saudi Arabia. On Thursday, state energy giant Saudi Aramco directed staff to evacuate its headquarters situated in Dhahran near Bahrain amid intensifying clashes between Saudi forces and Yemen-based Houthi fighters. Fighting between the Houthi movement and the Saudi-led military coalition supporting Yemen's recognized administration has escalated around the vital Bab el-Mandab strait at the Red Sea entrance.
Analysts noted that traders are pricing in potential threats to shipping corridors and extraction infrastructure. Giovanni Staunovo, an analyst at UBS, observed that market participants remain anxious about further escalation that could cause fresh export interruptions, noting that volatile transport flows and steep cargo shipping rates have tightened global availability. Linh Tran, an analyst at XS.com, pointed out that price durability will hinge on the duration and severity of actual flow disruptions.
Compounding regional logistical strains, authorities in the United Arab Emirates reported an oil leak from a vessel near the coast of Umm Al Quwain on Friday. The UAE Ministry of Climate Change and Environment initiated containment efforts and environmental reviews, though officials did not disclose the origin of the leak or name the vessel.
Supply constraints emerged in North Africa as well. In Libya, authorities shut an oil pipeline valve connecting the Tahara and Hamada fields to the export hub at Zawiya, reducing output from both deposits, the National Oil Corporation confirmed.
Meanwhile, vessel-tracking information revealed that an initial cargo of Russian diesel destined for the United States is en route to New York. The shipment follows an unexpected arrangement between Washington and Moscow unveiled by US President Donald Trump, intended to alleviate elevated domestic fuel expenses ahead of upcoming midterm elections.
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VerifiedReported from Dawn (Pakistan).
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