Oil Prices Climb as Houthi Attacks on Saudi Arabia and Stalled Hormuz Talks Stoke Supply Fears

Oil prices extended recent gains on Tuesday as escalating conflict in the Middle East fueled investor concerns over significant supply disruptions. The rise was driven by reports of new attacks on Saudi Arabia by Yemen's Houthi group and the postponement of crucial talks aimed at reopening the Strait of Hormuz.

By 8:16 PM ET (00:16 GMT), Brent crude futures had climbed 0.9% to $106.64 a barrel, while West Texas Intermediate (WTI) crude futures also gained 0.9%, trading at $102.34 a barrel. The price movements reflect a growing geopolitical risk premium being factored into the market.

Houthi Attacks Threaten Key Infrastructure

Yemen’s Iran-aligned Houthis reportedly launched additional strikes against Saudi Arabia on Monday. These attacks add to concerns over the security of the kingdom's oil exports, following strikes last week that took the country's east-west pipeline offline.

The group's strategic positions along the Red Sea also pose a threat to shipping through the Bab al-Mandab strait, a critical chokepoint for global oil supplies. According to analysts cited in reports, the escalating conflict could potentially disrupt an additional 4% to 5% of global oil supplies.

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Hormuz Diplomatic Efforts Delayed

Adding to supply-side worries, Oman announced on Sunday the postponement of a meeting between Iran and Gulf states scheduled for Monday. The talks were intended to address the reopening of the Strait of Hormuz, a waterway that handled about a fifth of the world's oil supply before the U.S.-Iran war.

Flows through the strait remain at a small fraction of their pre-war levels. Muscat did not provide a new date for the meeting. The delay occurred amid conflicting reports, with Iran claiming a Panamanian-flagged tanker was hit by sea mines in the strait, a claim that U.S. Central Command said was false.