October WTI crude futures jumped 11.01% this week after Houthi forces seized Yemen's Red Sea port of Mocha and captured islands guarding the Bab al-Mandeb Strait, threatening the alternate Saudi export route through Yanbu. Middle East production shut-ins, an OPEC+ output shortfall and returning Chinese buying compounded the rally.
October WTI crude futures traded at $101.26 early Friday, up $10.04, or 11.01%, for the week. The contract climbed as high as $104.46, its strongest level since May. The rally accelerated after Houthi forces seized Yemen's Red Sea port of Mocha and captured islands guarding the Bab al-Mandeb Strait.
Houthis take control of the strait
Yemen's Houthis captured the Red Sea port of Mocha on Thursday, taking the approach to the Bab al-Mandeb Strait, which connects the Red Sea and the Suez Canal to the Gulf of Aden and the Indian Ocean. The group also seized Perim Island, 13 square kilometers that split the strait into two channels, and Zuqar Island, letting Houthi forces monitor and potentially mine the waterway.
Ahmed Nagi, a Yemen analyst at Crisis Group, said: "Now they are fully in control of Bab al-Mandeb".
Saudi's alternate export route now at risk
Saudi Arabia had rerouted more than 70% of its crude exports through the Red Sea port of Yanbu since Iran closed the Strait of Hormuz. Houthi forces are now threatening that alternate route. Saudi oil production fell to 6.2 million barrels a day in August, its lowest this year, according to a report published by OPEC on Thursday.
Middle East shut-ins keep climbing
Middle East crude oil production shut-ins averaged 6.7 million barrels per day in August, up from 5 million in July. The EIA expects shut-ins to average about 5.7 million barrels per day during the fourth quarter. Global inventories have already fallen by roughly 400 million barrels this year.
OPEC+ left its October production policy unchanged Sunday after six consecutive monthly increases, yet the group's 11 members produced 19.71 million barrels per day in August, down 640,000 barrels per day from July.
Chinese demand returns, U.S. stocks offer little resistance
Chinese refiners increased purchases in recent weeks, including barrels from West Africa, Canada and South America, weakening one of the stronger arguments against higher crude prices this week. OPEC also lowered its 2026 world oil demand growth forecast to 380,000 barrels per day Thursday, its fifth consecutive downward revision.
U.S. commercial crude inventories fell 391,000 barrels to 424.1 million barrels during the week ended September 4. Gasoline inventories rose 1.3 million barrels and distillates increased 2.1 million barrels.
Sources: Oilprice.com, Oilprice.com, Markets
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