Oil Prices Surge 4% After Houthi Missile Attack on Saudi Arabia

Oil prices climbed approximately 4% to a one-week high on Thursday, driven by escalating geopolitical tensions in the Middle East after Yemen's Houthi group launched missiles at Saudi Arabia.

International benchmark Brent crude futures rose $4.10, or 4.0%, to trade at $107.18 a barrel, while U.S. West Texas Intermediate (WTI) crude increased by $3.66, or 4.0%, to $95.82 a barrel, according to Reuters data. The move put Brent on track for its highest close since September 15 and marked the first gain for WTI after six consecutive days of declines.

Geopolitical Tensions Mount

The primary catalyst for the price surge was a report from the Saudi-led coalition in Yemen, which stated it had intercepted six ballistic missiles fired by the Iran-backed Houthis. The thwarted attacks targeted the southern province of Taif and the Yanbu area on the Red Sea, a critical hub for Saudi oil exports and refining.

Adding to market uncertainty, diplomatic efforts between the United States and Iran showed little sign of progress. A senior Iranian official told Reuters that the two sides remain far apart on key issues. Tensions were further stoked by a U.S. deadline passing for global firms to cease business with Iran's airlines, a move Iran threatened to retaliate against.

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Market Indicators and Supply Dynamics

The risk premium in the market was also reflected in the widening spread between the two major crude benchmarks.

• The premium of Brent over WTI rose to its highest level since May, which typically makes U.S. crude exports more economically attractive.
• However, analysts noted that soaring tanker chartering costs have recently capped U.S. export volumes. Weekly exports stood at 3.3 million barrels per day for the week ended September 18, down significantly from a record 6.4 million bpd in April, according to the U.S. Energy Information Administration.

Separately, the market is also monitoring tightness in refined products. U.S. diesel futures traded over 5% higher on Thursday amid reports, disputed by the U.S. Energy Secretary, that Washington was considering a 90-day ban on diesel exports to manage high domestic prices.