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

The price of Brent crude oil climbed to its highest level in almost half a year on Friday, reaching an intraday peak of $114.94 a barrel, after reports confirmed a series of Houthi attacks on civilian and energy infrastructure in Saudi Arabia. The surge came as traders reacted to the growing threat of disruptions to the world’s biggest oil exporter, adding fresh uncertainty to an already volatile market.Brent futures on the ICE exchange recorded the rise, with the benchmark hovering above $115 for the first time since early March. West Texas Intermediate (WTI) benchmark, which is closely linked to Brent, moved up to $112.53 per barrel, reflecting a similar risk‑premium sentiment..

The spike is part of a broader rally that has lifted oil prices from the low $90s to the high $110s over the past month, after a period of stagnation that began in late July.Saudi Arabia, which accounts for roughly a quarter of the world’s crude supply, has been repeatedly targeted by the Houthi militia based in Yemen. The latest wave of attacks, which included a missile strike on a refinery in Dammam and an electronic sabotage operation that temporarily knocked out power at a key pumping station, heightened fears that production could be curtailed or that supply lines could be hampered. Although the attacks did not cripple any single facility for an extended period, the cumulative risk has convinced market participants that the probability of a sustained interruption remains high.The reactions to the news were swift..

Within the first hour of trading, Brent futures climbed from the mid‑$110s to above $115, while the U.S. Dollar Index fell 0.6%, lifting the dollar‑oil correlation that has historically dampened price swings. A survey of futures traders conducted by the New York Mercantile Exchange indicated that 72% of respondents increased their long positions in the near‑month contracts, citing the Houthi threat as the primary driver.While the attacks have sparked fresh concerns, analysts caution that the actual impact on supply may be limited in the short term..

Saudi Arabia’s oil output remains at a robust 10.9 million barrels per day, and the kingdom’s state oil company, Saudi Aramco, has repeatedly affirmed that its production capabilities are not currently threatened. However, the risk of a prolonged or escalated conflict could still trigger a tighter supply curve, especially if shipping routes through the Strait of Hormuz become contested or if further facilities are hit.In response to the market volatility, India’s National Stock Exchange and BSE have reported that the country’s crude basket has averaged $120.08 per barrel so far this month, up 15% from the same period last year. The rise in domestic crude prices has already prompted several Indian oil refiners to adjust their product pricing..

Adani Total Gas, for instance, announced a 4.45‑rupee per kilogram increase in compressed natural gas (CNG) prices, a move that reflects the broader cost pressures being transferred from upstream to downstream sectors.The price hike is not isolated to India. Across the globe, countries that rely heavily on oil imports have seen similar upticks. The European Union, which imports nearly a third of its oil from the Middle East, has reported an average crude price increase of 12% this quarter..

In the United States, the Energy Information Administration noted that the average wholesale price for gasoline rose by $0.03 per gallon over the past week, a figure that is partially attributed to the recent Brent rally.The broader geopolitical backdrop is also contributing to the market’s sensitivity. The United Arab Emirates, which shares a border with Yemen, has recently increased its military presence in the region, citing concerns over Houthi maritime attacks. At the same time, the United States has announced a new diplomatic initiative aimed at de-escalating tensions in the Red Sea, but the efficacy of these measures remains to be seen..

The combination of heightened military activity and political uncertainty has made oil markets particularly receptive to any signals that could indicate a further escalation.Oil futures traders are now looking ahead to the next major data release, which will include the U.S. monthly inventory draw reported by the Department of Energy. If the inventories show a stronger-than-expected decline, it could further support the rally..

Conversely, if the draw is milder, traders may reassess their exposure to risk. The volatility index for oil futures, VXX, has spiked by 4% over the past 24 hours, underscoring the heightened risk appetite.Financial markets are not the only sectors feeling the ripple effects. Shipping companies are re‑evaluating their routing options through the Strait of Hormuz, a chokepoint that has long been a focal point for oil transportation..

The tanker industry’s freight rates have risen by 8% in the last week, reflecting a premium for vessels that can navigate alternative routes. Insurance premiums for shipping in the Gulf region have also increased, as insurers factor in the increased likelihood of maritime incidents.In sum, the latest Houthi attacks have injected fresh uncertainty into an already volatile oil market, pushing Brent crude to its highest level in nearly six months. While the direct impact on supply remains limited for the moment, the perception of risk continues to drive prices upward..

As the world watches the unfolding situation in Yemen and its spillover effects on Saudi Arabia, market participants remain on alert for any new developments that could either reinforce or dampen the current rally..