Brent crude oil prices climbed to their highest level in six months this Friday, surpassing $117 a barrel. The significant increase is largely attributed to mounting geopolitical tensions in the West Asia, particularly fears of renewed US strikes on Iran and the potential for widespread disruptions to global oil supplies.
Escalating US-Iran Tensions Fuel Price Hike
Market sentiment has been heavily influenced by uncertainty surrounding Washington's stance toward Tehran. US President Donald Trump recently indicated that negotiations with Iran were not underway and suggested that something would happen “fairly soon.” These comments followed reports that US and Israeli officials were planning fresh strikes on Iran after the US midterm elections.
In response, Iran’s army chief stated the country’s military was fully prepared for “asymmetric warfare,” having strengthened its capabilities. The prospect of renewed hostilities raises concerns that oil production, vital export infrastructure, or critical shipping routes could be severely impacted, adding a substantial geopolitical risk premium to crude prices.
Houthi Attacks Threaten Key Supply Routes
Adding to regional security concerns, Houthi attacks have also played a role in the price surge. Saudi Arabia reported a drone attack on its Shaybah oil field in the Eastern Region, resulting in two fatalities and two injuries. Another reported attack at King Fahd International Airport in Dammam also claimed two lives and injured eight. Following these incidents, Saudi Aramco reportedly instructed staff to evacuate its Dhahran headquarters and work remotely.
These developments have drawn increased attention to the Bab el-Mandeb Strait, a crucial maritime passage connecting the Red Sea and the Gulf of Aden. Any disruption to this strait could significantly delay oil shipments, force vessels to take longer, more expensive routes, and escalate freight costs. UBS analyst Giovanni Staunovo warned that further escalation could lead to additional supply disruptions, with analysts noting that the duration and scale of any interruption would be key in determining how long prices remain elevated.
Broader Supply Concerns Add Uncertainty
Beyond the West Asia, other global factors are also contributing to market uncertainty. Authorities in the United Arab Emirates reported an oil spill off the coast of Umm Al Quwain, though its cause and the vessel involved remain unestablished. In Libya, production at the Hamada and Tahara oil fields saw reductions following the closure of a pipeline valve connecting them to the port of Zawiya, with the extent and duration of this disruption still unclear.
Meanwhile, LSEG data also tracked a Malta-flagged vessel transporting 40,000 metric tonnes of Russian diesel to New York, highlighting the complex global supply chain dynamics. With geopolitical risks, shipping costs, and production disruptions all in focus, traders will continue to closely monitor developments in the West Asia and the security of major oil supply routes for further cues on crude prices.