Oil prices extend rally to near six-month high amid Houthi attacks on Saudi Arabia

Oil prices surged on Friday, pushing Brent crude futures to an intraday peak of $114.94 a barrel, the highest level seen in nearly six months. The rally was sparked by a series of attacks launched by Yemen’s Houthi rebels on Saudi Arabia’s civilian and energy infrastructure, which raised fresh concerns about the stability of supply from the region that accounts for a significant share of the world’s oil output. Traders responded swiftly, buying into the market as the risk premium on Saudi crude widened, while broader sentiment was reinforced by a series of complementary factors that have been nudging prices upward in recent weeks.The Houthi attacks, which began late on Thursday, targeted several key installations, including pipelines and storage facilities that feed the kingdom’s export terminals..

Although the rebels have previously struck at oil assets, the scale and timing of this latest wave caught analysts off guard. Saudi Aramco, the state-owned oil giant, reported that its production was momentarily disrupted but that output levels were expected to rebound within 24 hours. Nevertheless, the uncertainty surrounding the duration of the disruptions was enough to prompt a sharp uptick in futures contracts across both the Brent and West Texas Intermediate (WTI) benchmarks.Market participants noted that the price move came on the back of a broader tightening of global oil inventories..

The International Energy Agency (IEA) recently warned that global crude stocks are at their lowest levels since the early days of the pandemic, a situation that leaves the market vulnerable to any supply shock. In the United States, the Energy Information Administration (EIA) recorded a drawdown of 2.4 million barrels in the week to 29 September, while European storage levels have also slipped, reinforcing the perception that any disruption in the Middle East could translate into a noticeable shortage for consumers worldwide.Against this backdrop, the reaction in Asian markets was equally pronounced. India’s crude basket, which reflects the average price of a range of crude grades imported by the country, climbed to $120.08 per barrel so far this month, marking a new peak for the Indian market in the current cycle..

The rise has reverberated through downstream sectors, where refiners are scrambling to secure feedstock at a time when the margin between crude and refined products remains under pressure. In response, several Indian energy firms have adjusted their pricing strategies to protect profit margins.One such company, Adani Total Gas, announced a hike in compressed natural gas (CNG) prices, raising the cost by ₹4.45 per kilogram. The decision, disclosed in a statement on Friday, cited the “increasing cost of crude oil and related feedstock” as the primary driver..

While the increase will directly affect commuters and transport operators who rely on CNG for fuel, analysts suggest that it also reflects a broader trend of cost pass‑through that could spread to other energy products as the price of oil continues its upward trajectory.The price spike has also revived discussions about the strategic importance of the Red Sea and the Bab al‑Mandab strait, the narrow waterway through which a sizable proportion of the world’s oil shipments transit. Shipping firms have begun to reassess route risk assessments, with some operators considering alternative passages to avoid the heightened threat of missile and drone attacks. Although longer routes would increase freight costs, the potential for a disruption in the primary channel has become a more tangible risk than it was a few months ago.Investors have responded by reallocating capital towards energy equities and commodities, a move that has been mirrored in the performance of major oil‑related indices..

The FTSE 350 Oil & Gas index rose 1.8% on Friday, while the S&P 500 Energy sector logged a gain of 2.1%, reflecting heightened appetite for assets that stand to benefit from higher oil prices. At the same time, the rally has sparked debate among economists about the possible spill‑over effects on inflation, particularly in economies already grappling with elevated price pressures.Central banks in several major economies are monitoring the situation closely. The European Central Bank and the U.S..

Federal Reserve have both highlighted energy price volatility as a factor in their policy deliberations, noting that sustained upward pressure on oil could complicate efforts to bring inflation back to target levels. However, policymakers have also cautioned that temporary supply disruptions, while impactful, may not translate into a long‑term shift in price trends if inventories are rebuilt and production rebounds.Looking ahead, market analysts are divided on how long the rally will last. Some contend that the Houthi attacks could be a one‑off event, after which prices may settle back toward the $110‑$112 range as supply normalises..

Others warn that the broader geopolitical tension, combined with already thin inventories, could keep a floor in place for the near term. The consensus is that traders will remain vigilant, watching for further developments from the Gulf and for any signals from OPEC+ regarding production adjustments.In the meantime, consumers and businesses worldwide are bracing for the immediate consequences of higher fuel costs. Airlines have already begun to factor the price surge into ticket pricing, while logistics firms are reassessing freight rates to maintain margins..

For countries like India, where the transport sector consumes a sizeable share of national oil demand, the ripple effects may be felt across the economy, potentially influencing everything from household budgets to industrial output.As the market digests the latest shock, the interplay between geopolitical risk, inventory levels and policy responses will determine whether the rally continues its march toward a new six‑month high or whether it stalls, giving way to a period of consolidation. For now, the message from the front line of the oil market is clear: disruptions in the Gulf remain a potent catalyst for price movements, and the global economy must adapt to an environment where supply certainty can no longer be taken for granted..