Oil hits six-month high above $116 as Iran war and Houthi strikes rattle energy markets

Oil markets closed out the week at a six-month high on Friday, with Brent crude futures settling at $116.72 a barrel — a gain of 3.1% on the day and the highest settlement for the international benchmark since April 29, according to CNBC. West Texas Intermediate, the U.S. benchmark, rose 3.8%, closing at $103.27 a barrel. For the week, Brent gained 6.2%, its third consecutive weekly advance.

The surge is being driven by a cascade of threats to Middle Eastern energy infrastructure. Reuters reported that Iran-backed Houthi rebel attacks prompted Saudi Aramco to direct employees to leave its Dhahran headquarters and carry out their work remotely. Saudi state media reported that a drone strike on the Shaybah oil field in Saudi Arabia's Eastern Region on Wednesday killed two people and wounded two others. At least two more people were killed and eight injured in a separate attack on King Fahd International Airport in Dammam the same day, according to CNBC.

A coalition led by Saudi Arabia said it shot down a ballistic missile that had been fired at Yanbu, a Red Sea port whose role in routing oil around the Strait of Hormuz makes it vital to global energy supply. Initial reports indicated no damage to Yanbu's infrastructure, according to consultants Rapidan Energy Group, as cited by Arkansas Online.

WTI and Brent reversed earlier losses as escalation fears resurfaced amid rumours of attacks on Saudi energy infrastructure.— Energy Aspects, research and consultancy

Over the past 10 days, attacks near the Strait of Hormuz — a chokepoint through which a significant share of the world's seaborne oil passes — have risen sharply, with Iran saying the escalation is a response to a U.S. blockade of its ports and tougher sanctions introduced last month, according to Arkansas Online. Analysts at Kpler said in a report that intensified Iranian attacks had driven Gulf crude flows sharply lower and that they expected a slower, more uneven recovery in Hormuz flows without a comprehensive political deal.

The market remains concerned about a potential escalation, which, in a worst-case scenario, could trigger renewed supply disruptions.— Giovanni Staunovo, analyst, UBS

Investor anxiety is also being stoked by signals from Washington. On Wednesday, President Donald Trump stated that the U.S. was not negotiating with Iran and that something would happen 'fairly soon.' According to CNBC, U.S. officials informed The New York Times that the U.S. and Israel have plans for fresh strikes on Iran after the midterm elections. In response, Iran's army chief said through state media agency Tasnim that the country's military had bolstered its capabilities and stood ready for 'asymmetric warfare.'

The U.S. State Department has ordered all non-essential personnel to leave Saudi Arabia due to the ongoing Houthi strikes, CNBC reported.

A separate front is adding to supply uncertainty: On Thursday, Ukraine struck a Russian oil refinery after President Volodymyr Zelenskyy announced that Kyiv was walking away from a ceasefire that had covered energy sites. Two industry sources told Reuters that Russia's Ryazan oil refinery halted operations at a primary crude distillation unit following a drone attack, prompting concern about the volume of diesel Russia can supply to global markets.

Conflict in the Middle East still keeps coming back and I think it's questionable how much diesel fuel Russia can actually deliver to the markets. Those two factors are just continuing to have traders be buyers.— Dennis Kissler, senior vice president of trading, BOK Financial

Governments are moving to cushion the blow. On Thursday, the International Energy Agency agreed to put more than 20 million barrels of fuel into the market. The U.S. Department of Energy also issued a request for proposal for an exchange of up to 17 million barrels of crude from the Strategic Petroleum Reserve, Arkansas Online reported. Washington had previously agreed to loan 172 million barrels from the SPR as part of a broader deal with roughly 30 IEA member countries to release a combined 400 million barrels from reserves worldwide.

Elevated crude prices are flowing directly to the pump. According to auto club AAA, American drivers were paying an average of $4.33 per gallon on Friday, compared with $3.06 a year earlier. In Arkansas, the average was $3.93, compared with $2.64 a year ago, Arkansas Online reported.

According to Kurdistan24, Houthi forces have pushed toward the Bab el-Mandeb Strait, a strategic maritime passage linking the Red Sea to the Gulf of Aden that serves as a key corridor for energy shipments among the Middle East, Europe, and other global markets. Should that route be disrupted, shipping costs could climb and global oil supplies could come under further strain.

Why it matters — With Brent above $116 and U.S. gasoline averaging $4.33 a gallon, the convergence of the Iran war, Houthi attacks on Saudi infrastructure, and uncertainty about Russian diesel supply means consumers and markets face sustained price pressure with no clear resolution in sight.

Sources differ on Brent crude Friday settlement price: $116.72/barrel (3.1% gain, highest since April 29) (cnbc.com) vs $109.86/barrel (3.7% gain, highest since May 19) (arkansasonline.com) vs $113.96/barrel at 0810 GMT, intraday high of $114.72 (highest since May 4) (kurdistan24.net)

Sources differ on WTI Friday settlement price: $103.27/barrel (cnbc.com) vs $101.41/barrel (arkansasonline.com) vs $100.57/barrel at 0810 GMT (kurdistan24.net)

Reported by thehill.com, moneycontrol.com, cnbc.com, arkansasonline.com, kurdistan24.net, twelvedata.com