Brent crude touched $110 on Friday for the first time since May after Saudi-led forces reported destroying missiles aimed at the kingdom's energy hubs. Analysts warn the Middle East crisis is deepening, while fuel costs add political pressure on Donald Trump weeks before US midterm elections.
The price of oil hit a five-month high after Saudi Arabian-led military forces reported destroying ballistic missiles fired at some of the kingdom's main energy hubs. The Brent crude benchmark settled 3.7% higher at $109.86 a barrel on Friday after earlier hitting $110.
US marker West Texas Intermediate topped $100 a barrel for the first time in a month, settling up 3.5% at $101.41.
Houthi attacks target Saudi energy sites
The Riyadh-led Coalition to Support Legitimacy in Yemen said earlier on Friday that its troops had intercepted a ballistic missile launched toward Yanbu, one of the kingdom's largest oil refining and petrochemical centres. Spokesperson Turki al-Maliki said its forces had also destroyed two cruise missiles over the Red Sea and three drones in the southern and Riyadh regions.
Yanbu matters because of where Saudi crude now flows. Schreiner Parker, an analyst at Rystad Energy, said a lot of Saudi oil is piped through the East-West pipeline because of attacks on tankers in the Strait of Hormuz, and that oil is offloaded at Yanbu, which makes it a sensitive target.
Analysts see a crisis far from over
Analysts warned that a deepening Middle East crisis is now looming over oil markets. Iranian attacks against ships in the Strait of Hormuz have increased over the past week, while Yemen's Iran-backed Houthi rebels have stepped up attacks against Saudi Arabia, including a missile strike on the headquarters of Saudi Aramco.
Helima Croft, global head of commodity strategy at RBC Capital Markets, said the attacks show the region is not returning to normal. According to Croft: "we are nowhere near normal in the Middle East".
Fuel costs raise political stakes for Trump
The surge follows months of anxiety about high fuel costs triggered by Trump's Iran war, launched in February. Trump has moved to contain the fallout by seeking to import fuel from Russia and potentially easing sanctions on dark fleet vessels.
According to polls, American voters are anxious about the new burst of inflation sparked by the war. Street demonstrations over high fuel costs have also taken place in Europe, Asia and Latin America.
Source: Financial Times
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