Oil prices rose by more than 1 percent on Friday as Houthi attacks in Saudi Arabia raised fresh concerns about disruptions to Middle Eastern energy supplies, keeping traders on edge.
Brent crude futures gained $1.30, or 1.2 percent, to $114.47 a barrel by 0639 GMT. US West Texas Intermediate (WTI) crude rose $1.37, or 1.4 percent, to $100.84 a barrel.
Both benchmarks are heading for weekly gains. Brent, which settled at its highest level since May 4 on Thursday, is on track for a third consecutive week of increases. WTI is set to post its second straight weekly gain.
The latest escalation has put Saudi Arabia’s oil infrastructure in focus. Saudi Aramco ordered the evacuation of its headquarters in Dhahran on Thursday as fighting intensified between the world’s largest crude exporter and Yemen-based Houthi forces, Reuters reported.
The growing risk of further attacks has added to concerns that oil shipments from the region could face fresh obstacles.
“Markets are increasingly worried about renewed escalation in the Persian Gulf,” ING analysts said in a note on Friday, warning that such a scenario could threaten oil flows that have so far remained resilient.
The analysts said a further escalation appeared to be the most likely outcome. Even without renewed fighting, the risk alone could keep prices elevated by adding a geopolitical premium to crude.
The conflict also threatens shipping routes vital to global energy trade. Clashes between the Houthis and a Saudi-led coalition supporting Yemen’s internationally recognised government have continued as the Iran-aligned group advances towards Bab el-Mandeb, a strategic shipping chokepoint at the entrance to the Red Sea.
For oil markets, the scale of any actual supply disruption will be crucial in determining whether prices continue to rise.
Linh Tran said traders would be watching the extent of disruptions and how long operations take to return to normal. If attacks continue and delay deliveries, higher prices would have a stronger basis, she said.
Supply concerns are also emerging elsewhere. In Libya, a pipeline valve carrying oil from the Hamada and Tahara fields to Zawiya port has been shut, reducing production at both fields, the head of the National Oil Corporation told Reuters on Thursday.
With tensions in the Middle East and disruptions in Libya adding to uncertainty, traders are weighing the risk of tighter supplies against the resilience of oil flows so far. Any prolonged interruption could put further upward pressure on crude prices.
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