Oil Prices Set for Strong Weekly Gain as Houthi Attacks Widen Mideast Conflict

Oil prices retreated in Asian trading but are poised for a third consecutive week of significant gains as escalating military conflict in the Middle East stokes fears of major supply disruptions. Tensions surged after Iran-backed Houthi rebels attacked Saudi tankers in the Red Sea, prompting new threats of military action from the United States.

Market Snapshot

Despite a minor pullback on Friday, benchmark crudes are closing the week with substantial increases. Brent crude, the global benchmark, is on track for a 14% weekly gain after hitting a two-month high.

• Brent crude futures fell 0.6% to $100.09 a barrel.
• West Texas Intermediate (WTI) crude futures also declined 0.6% to $91.62 a barrel.

This marks the third straight week of sharp price advances, underscoring investor concern over the stability of global oil supplies.

Geopolitical Tensions Escalate

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The primary driver for this week's rally was an attack by Yemen's Houthi group on vessels shipping Saudi oil through the Bab al-Mandab Strait. The waterway is a critical chokepoint that Saudi Arabia had been using as an alternative route to bypass potential disruptions in the Strait of Hormuz, signaling a dangerous expansion of the conflict.

In response, U.S. President Donald Trump on Thursday vowed “major military punishment” against both Iran and the Houthis. The New York Times also reported that Iran had rejected a U.S.-backed ceasefire proposal, indicating that diplomatic efforts to de-escalate the situation have faltered.

Broader Market Impact

The continued conflict is expected to tighten global oil inventories, which had seen a brief respite in the prior month. For investors, a sustained surge in oil prices raises concerns about persistent, energy-driven inflation.

This inflationary pressure could, in turn, compel major global central banks to maintain a more hawkish monetary policy stance to manage rising consumer prices, potentially impacting broader economic growth.