Global crude oil prices surge to highest level since May amid Middle East attacks

Global crude oil prices are set for a third weekly gain on Friday as intensifying attacks on Saudi Arabia raise the risk of wider Middle East supply disruptions.

Brent crude, the international oil benchmark, traded around $114 (€100.72) a barrel, up almost 4 per cent this week, while West Texas Intermediate, the US benchmark, was above $100. Iran-backed Houthi militants claimed recent attacks on the Saudi Red Sea port of Yanbu, as well as deadly strikes on an oilfield and airport in the kingdom.

The flare-up threatens to widen hostilities around the Strait of Hormuz, where crude exports have recovered to near pre-war levels. Brent is up more than 85 per cent this year because of the US-Iran war, now approaching its ninth month, while refined-product prices have risen even faster, most notably diesel.

Higher oil prices dragged on European shares on Friday. The pan-European Stoxx 600 index was ⁠down 0.13 per cent in early trading, ‌after ‌logging ​its biggest one-day drop in three weeks on Thursday and putting ⁠the index on ​course for a weekly decline.

At the White House on Thursday, US president Donald Trump told reporters that the US has “knocked” out Iran and threatened to go “a little bit further”, without elaborating. The New York Times reported this week that the US and Israel have developed plans for renewed strikes against the Islamic Republic after the American midterm elections early next month.

“The latest geopolitical escalations are pointing to a more intensified strike on Iran, which is pushing crude higher throughout the price curve,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. Most traders expect oil prices to be higher for longer, he said.

The Yemen-based Houthis have repeatedly attacked Saudi Arabia in recent months. State-owned Aramco evacuated its Dhahran headquarters on Thursday and asked staff to work from home after an alarm, according to people familiar with the matter. The reason for the alarm was not immediately known.

While crude flows from the Gulf have recovered, oil-product shipments from the region remain constrained. That squeeze, along with intensifying Ukrainian attacks on Russian refineries, has prompted governments to tap stockpiles. Trump is also pushing measures to lower prices in advance of the midterm elections, including a diesel deal with Moscow.

Russia, meanwhile, is seeing some relief in its domestic fuel market, with gasoline and diesel production rising, Interfax reported, citing the government. Fuel inventories are also being replenished, it said. – Bloomberg, Reuters