Oil markets jumped on 8 September after Yemen’s Iran-aligned Houthi movement attacked energy facilities in four cities across southern Saudi Arabia: Abha, Khamis Mushait, Najran and Jizan. Saudi Arabia’s Ministry of Energy confirmed that civilian and economic sites were struck, with reports of fires and more than 70 people injured, according to allweatherfinance.com’s citation of Saudi officials and CCTV International News.
Brent crude, the international oil benchmark, rose 1.65% to $98.65 a barrel following the attacks, while US crude, known as West Texas Intermediate, gained 2% to $93.31, according to figures reported by allweatherfinance.com. The moves brought Brent within striking distance of the $100 threshold it briefly crossed in July.
An escalating campaign since July
The attacks are the latest chapter in a conflict that began on 20 July, when the Houthis declared a maritime blockade against Saudi Arabia. Three days later, the group struck two Saudi oil tankers, named Encelia and Layla, near the Bab el-Mandeb Strait, a narrow waterway linking the Red Sea to the Gulf of Aden through which much of the world’s seaborne oil trade passes.
“We targeted two Saudi oil tankers, named Encelia and Layla, for their violation of the blockade decision issued by the armed forces,” said Yahya Saree, a Houthi forces spokesman, quoted by Al Jazeera via OilPrice.com.
Repeated strikes through late July and August forced Saudi Arabia’s Jizan refinery, which processes 400,000 barrels of oil a day, offline entirely, according to Bloomberg reporting cited by allweatherfinance.com. A Houthi spokesperson has now signalled the group intends to announce a broader military operation extending further into Saudi territory, raising the prospect of further disruption to the kingdom’s energy infrastructure.
Analysts say the disruption is being felt beyond spot prices. “Escalating tensions in the Middle East that are disrupting oil exports, together with drone strikes in the Black Sea, have once again tightened the oil market,” said Giovanni Staunovo, a strategist at UBS, according to The National. He added that “the tightening of the oil market is also evident in timespreads,” a reference to the pricing gap between near-term and future oil contracts that traders watch as a signal of supply tightness.
Gas prices climb as UK winter storage looms
The disruption has also pushed UK wholesale gas prices higher. Month-ahead gas prices rose to around 184p a therm, close to levels last seen in early 2023 and, according to TradingEconomics, the highest in more than three and a half years. Analysts attribute the rise to a combination of Gulf tensions and the UK’s comparatively limited gas storage capacity heading into winter, a long-standing vulnerability compared with continental European neighbours that maintain larger reserves.
The broader Gulf escalation has also seen reported US military strikes on Iranian targets and a sharp reduction in tanker traffic through both the Strait of Hormuz and the Bab el-Mandeb Strait, two chokepoints through which a large share of global oil and gas shipments normally flow. European governments, already under pressure to fill gas storage ahead of winter, are watching the situation closely as a further sign of how fragile Gulf supply routes have become this year.
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