Brent Oil Surges Above $97 After Red Sea Tanker Attacks
Oil prices climbed sharply during Asian trading on Thursday, extending gains for a fifth consecutive session.
The rally followed claims by Iran-aligned Houthi militants that they had attacked two Saudi oil tankers in the Red Sea. The incidents increased fears of further disruption across major Middle Eastern shipping routes.
September Brent crude futures rose 3.6% to $97.45 per barrel. Meanwhile, West Texas Intermediate crude gained 2.7% to $89.17 per barrel.
Brent reached its highest level since June 8, when oil prices began falling after a temporary ceasefire agreement between the United States and Iran.
Houthis Claim Attacks on Saudi Oil Tankers
The Houthis said they targeted the Saudi tankers ENCELA and LAYLIA after accusing the vessels of violating a recently announced maritime blockade.
Saudi authorities had not confirmed whether the tankers suffered any damage.
However, the reported attacks marked another escalation in a conflict that has increasingly threatened oil infrastructure, shipping activity and global energy supplies.
Bab el-Mandeb Strait Faces Growing Risks
Earlier in the week, the Houthis warned that they could block Saudi-linked shipping through the Bab el-Mandeb Strait.
The waterway connects the Red Sea with the Gulf of Aden and is one of the world’s most important energy transit routes.
A prolonged disruption could force oil tankers to sail around southern Africa. Such a diversion would lengthen delivery times and significantly increase fuel, freight and insurance costs.
U.S. Strikes on Iran Add to Supply Concerns
The United States completed another round of military strikes against Iran, marking a twelfth consecutive night of attacks.
The continued conflict has increased uncertainty surrounding tanker traffic through the Strait of Hormuz, another vital route for global oil shipments.
Iran’s Revolutionary Guards reported an explosion along a mined shipping route south of the strait.
According to the group, one of three oil tankers caught fire, while the other two vessels turned around.
Iran Claims Control of the Strait of Hormuz
Iran said it had full control of the Strait of Hormuz and claimed the waterway was completely closed.
Iranian authorities warned that oil tankers would not be allowed to pass without receiving prior approval.
The Strait of Hormuz and Bab el-Mandeb together handle a substantial share of global seaborne crude oil shipments.
As a result, any disruption to either route can quickly affect oil prices and global supply expectations.
Traders Focus on Shipping and Insurance Costs
Energy markets are increasingly focused on transportation risks across the Middle East.
Investors are monitoring higher insurance costs, possible tanker diversions and the risk of additional attacks on oil infrastructure or commercial vessels.
Several Saudi oil tankers travelling toward India and China reportedly changed course earlier in the week following Houthi warnings.
These route changes added to concerns that crude deliveries to major Asian buyers could face delays.
U.S. Crude Inventories Rise Unexpectedly
Oil prices remained higher despite data showing an unexpected increase in U.S. crude inventories.
The U.S. Energy Information Administration said commercial crude stocks rose by 2 million barrels during the week ending July 17.
Total crude inventories reached 411.7 million barrels. Analysts had expected stockpiles to decline.
Gasoline inventories increased by 800,000 barrels, while distillate supplies rose by 1.4 million barrels.
Overall U.S. commercial petroleum inventories climbed by 11.6 million barrels during the week.
Middle East Risks Support Oil Prices
Rising U.S. inventories would normally place pressure on crude prices.
However, concerns about shipping disruptions in the Red Sea and Strait of Hormuz outweighed the bearish inventory data.
Oil traders will continue to monitor military developments, tanker traffic and any signs of disruption to Saudi or Iranian crude exports.
