Defense · Report Line
Brent, the international oil benchmark, touched $99 per barrel on Tuesday after Saudi Arabia reported an attack on energy assets that caused temporary pauses in operations. U.S. crude oil also rose by more than 2.5% to nearly $94 per barrel. Wholesale gas prices rose 1.4%. The state-run Saudi Press Agency said the attacks were carried out by the ‘terrorist’ Houthis, with 73 civilians injured. The Saudis condemned the Houthis’ attacks on commercial vessels in the Red Sea and their ‘threats to freedom of international maritime navigation.’ Saudi Arabia is the world’s largest oil exporter.
The latest escalation came after the U.S. on Sunday struck three Iranian oil tankers, sinking one of the vessels. This followed Iran’s launch of ballistic missiles toward U.S. Navy ships. The renewed hostilities have kept Strait of Hormuz traffic at a minimum, with just four ships passing through on Saturday and six on Sunday. Before the war, the strait carried more than 20% of the world’s energy supply. Meanwhile, vessel traffic in Bab el-Mandeb Strait, between the Arabian Peninsula and northeastern Africa, was slightly compressed, with transits falling 16% from the prior week, though overall traffic of over 260 ships last week remained significantly higher than in the Strait of Hormuz.
On Tuesday, the national average gas price remained unchanged at $4.15 per gallon, but it has risen six cents from a week ago and 14 cents from a month ago. Since the war started, Brent has risen 36%, and the AAA national average gas price has risen 40%. Since the start of the year, Brent prices are up more than 62%. Diesel fuel hit a record high of $5.90 per gallon on Saturday and has remained at that level since. Oil prices remain a concern for the White House as midterm elections approach. President Donald Trump claimed oil prices would drop if the U.S. wins the war with Iran, potentially falling to as low as two dollars a gallon.
Goldman Sachs commodities analysts warned of ‘significant upside risk’ to Brent prices, forecasting Brent might exceed $120 if Persian Gulf oil flows remain low. HSBC analysts agreed, predicting Brent could rise to around $120 if diplomacy fails and Hormuz flows stay near current levels. Inventories have been drawn down rapidly after governments released 400 million barrels of oil to ease soaring prices. HSBC’s base case is for Brent to hover around $95 through the end of the year, but their forecast has been revised higher to $85 per barrel for 2027 and $75 per barrel for 2028 and beyond. Before the war, Brent traded around $70. Markets are increasingly pricing a prolonged Mideast conflict.
Higher oil prices have also driven bond yields to near 4.80% on the 10-year benchmark, the highest since early last week. Stock futures pointed to a largely flat open. The article highlights the geopolitical tensions, oil price volatility, and economic impacts of recent conflicts in the Middle East.
Source: NBC News
