Global oil prices have surged to their highest level in five months amid escalating tensions in the Gulf region, raising concerns of potential disruptions to crude oil supplies. On Thursday, Brent crude, the international benchmark, rose by 3% to reach $112 per barrel, a peak not seen since May 18. This spike follows a series of attacks in Saudi Arabia and incidents involving vessels near the Strait of Hormuz.
The latest unrest was triggered by Yemen’s Houthi movement, which launched attacks on multiple targets in Saudi Arabia on Wednesday. These attacks resulted in four fatalities and eight injuries, with a civilian airport in Dammam and an oilfield being among the locations hit by drones. In a separate development, Iran’s Islamic Revolutionary Guard Corps announced that its forces had targeted four vessels in the northern Gulf, accusing them of illegal oil transfers. Additionally, three other vessels reportedly encountered mines west of the Strait of Hormuz. Iran warned that further provocations could lead to a broader response involving US regional bases.
The escalating tensions have cast a spotlight on the security of the Strait of Hormuz, a vital artery for global energy shipments. Previous disruptions in this crucial shipping lane had driven oil prices significantly higher, with crude reaching $126 per barrel in April before a decline driven by hopes of a ceasefire. Although oil exports from the Persian Gulf have rebounded to levels above those before the conflict, increased pipeline shipments to the Red Sea and Gulf of Oman have somewhat mitigated shipping disruptions. However, the renewed attacks have reignited uncertainty regarding the stability of global oil supplies.
The rise in oil prices is exerting pressure on financial markets worldwide. Major stock indices in Europe and Asia experienced declines on Thursday, fueled by apprehensions that escalating energy costs might spur inflation and maintain elevated borrowing costs. In the United States, American Airlines shares tumbled as the company warned that the surge in fuel expenses could result in a financial loss this year, underscoring the broader economic repercussions of the rising oil prices.