Oil prices rose over 1% on Friday after Houthi attacks in Saudi Arabia stoked concerns of further disruption to energy supplies from the Middle East, Reuters reported.
Source: Reuters via SRN News
Brent crude futures climbed $1.30, or 1.2%, to $114.47 a barrel as of 0639 GMT, while US West Texas Intermediate crude futures rose $1.37, or 1.4%, to $100.84, Reuters reported. In simple terms — yaani — Brent is now well above $110 a barrel and US crude has crossed the $100 mark; when crude rises like this, petrol, diesel, air fares and shipping costs usually come under pressure in India and worldwide.
Brent, which settled at its highest since May 4 on Thursday, is set to close higher for a third successive week, while WTI is on track to finish higher for a second straight week, Reuters said. A separate Reuters report on Friday said gold was heading for its steepest weekly decline in more than four months as elevated oil prices fuelled expectations that the US Federal Reserve would keep interest rates higher for longer — showing how the oil rise is moving other markets too.
Source: Reuters via TradingView
Saudi Arabia is the world's largest crude exporter and home to lakhs of Punjabi and Indian workers. Fighting that threatens Saudi energy sites can push up fuel and flight costs and add uncertainty for workers and families who depend on Gulf jobs and remittances — even when, as in earlier attacks this week, operations themselves are not reported disrupted.
Saudi Aramco on Thursday ordered the evacuation of its headquarters in Dhahran, on the Gulf coast near Bahrain, Reuters reported, as fighting intensified between the world's largest crude exporter and Yemen-based Houthis.
“Markets are increasingly worried about renewed escalation in the Persian Gulf, a scenario that could threaten oil flows that have so far remained remarkably resilient,” ING analysts said in a note on Friday, quoted by Reuters. “Re-escalation seems the most likely path. Even if tensions don't re-escalate, the mere possibility is likely to keep a sizeable geopolitical risk premium embedded in prices.”
Clashes between the Houthis and a Saudi-led coalition that backs Yemen's internationally recognised government have raged since the Iran-aligned Houthis pushed towards Bab el-Mandeb, a shipping chokepoint at the mouth of the Red Sea, Reuters reported.
“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,” Linh Tran, an analyst at XS.com, told Reuters. “If attacks persist and delay deliveries, elevated prices will have a firmer foundation.”
In Libya, an oil pipeline valve from the Hamada and Tahara oilfields to Zawiya port has been shut, leading to a reduction in production at both fields, the head of the National Oil Corporation told Reuters on Thursday — a separate supply cut that added to the market's nerves. That Libya shutdown was reported separately by this desk on Thursday.
What is solid
- Brent rose 1.2% to $114.47 a barrel and WTI rose 1.4% to $100.84 as of 0639 GMT on Friday, Reuters reported
- Saudi Aramco ordered the evacuation of its Dhahran headquarters on Thursday, Reuters reported
- A pipeline valve shutdown in Libya reduced production at the Hamada and Tahara fields, Libya's National Oil Corporation head told Reuters
What is only claimed
- How much actual supply will be disrupted, and for how long — analysts quoted by Reuters said prices currently carry a geopolitical risk premium based on the possibility of escalation, not a confirmed large supply loss