Brent crude oil settled up 3.4% at $106.60 a barrel on Thursday after Saudi Arabia intercepted a Houthi missile attack, while U.S. and Iranian negotiators explored reopening the Strait of Hormuz. The rally came even as diesel prices have hit record highs and Washington weighs curbing fuel exports.
Oil jumped to a one-week high after Yemen's Houthi rebels fired missiles at Saudi Arabia, reviving fears that the nearly seven-month U.S.-Iran conflict could choke off more Gulf supply. Brent futures rose 3.4% to settle at $106.60 a barrel, its highest close since September 15. WTI crude climbed 2.7% to $94.61, its first gain after six straight losing sessions that had dragged it down 13%.
Houthi missiles renew supply fears
The Saudi-led coalition in Yemen said its defenses intercepted six ballistic missiles fired by the Houthis, thwarting strikes aimed at the southern province of Taif and the Yanbu area on the Red Sea. Yanbu serves as the export hub for Saudi Arabia's East-West pipeline, and tanker loadings there have yet to resume even as pumping volumes build back up, according to industry data. But both contracts were up about 5% at their session highs before paring gains after reports that U.S. and Iranian officials had discussed reopening the Strait of Hormuz.
Hormuz remains the key bargaining chip
U.S. and Iranian negotiators in New York are exploring a phased path out of the war that would have Tehran reopen the Strait of Hormuz in exchange for Washington lifting its economic blockade of Iran. Neither side wants to surrender its leverage, sources close to the talks told Reuters. The standoff matters because the Brent-WTI spread has widened past $11, compared with the $3 to $5 range that prevailed before the war, as seaborne crude carries a heavier premium for Middle East shipping risk than landlocked U.S. crude.
Diesel squeeze adds pressure
Diesel prices have hit record highs in recent weeks as Russia's export ban and Ukrainian strikes on refineries collide with Iranian attacks on Middle East energy infrastructure. U.S. Energy Secretary Chris Wright has contacted several major refiners to gauge support for a voluntary export restriction, an alternative to a short-term ban that Politico reported would run 90 days and land ahead of November's midterm elections; Wright has disputed that report. The government's own forecast puts Brent averaging $90 in the second half of 2026, well below Thursday's settlement, and it warns that price swings will likely stay more volatile than that outlook implies.
Sources: Investing.com, Investing.com
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