Global oil prices surged to a five-month high on Thursday as geopolitical tensions in the Gulf region reignited fears of supply disruptions. Brent crude, the international benchmark, rose 3% to reach $112 per barrel, the highest level since mid-May. The increase followed a series of attacks in Saudi Arabia and incidents involving vessels near the Strait of Hormuz.
The escalation began with Yemen’s Houthi movement launching attacks on Saudi targets, resulting in casualties at a civilian airport in Dammam and an oilfield hit by a drone. Four people were killed, and eight others were injured in these assaults. Meanwhile, Iran’s Islamic Revolutionary Guard Corps reported striking four vessels in the northern Gulf, accusing them of participating in illegal oil transfers. Additionally, three other vessels encountered mines west of the Strait of Hormuz, prompting warnings of potential broader responses against US regional bases.
These incidents have intensified concerns over the security of the Strait of Hormuz, a crucial energy shipping route. Past disruptions in this area have led to significant price hikes, with crude reaching $126 per barrel in April before a dip due to ceasefire hopes. Although exports from the Persian Gulf have recently surpassed pre-conflict levels, increased pipeline shipments to the Red Sea and Gulf of Oman have helped mitigate some of the shipping challenges. However, the renewed tensions cast doubt on the stability of global oil supplies.
The spike in oil prices has reverberated through financial markets, with major European and Asian stock indices declining on Thursday. Investors are wary that rising energy costs could stoke inflation and maintain high borrowing costs. In the United States, American Airlines’ shares took a hit after the company warned that elevated fuel expenses could lead to financial losses this year, underscoring the broader economic ramifications of soaring oil prices.