Global oil prices soared to a five-month high on Thursday amid escalating tensions in the Gulf region, driven by attacks in Saudi Arabia and incidents involving vessels near the Strait of Hormuz. Brent crude, the international benchmark, rose 3% to reach $112 per barrel, marking its highest level since May 18.
The surge in prices follows aggressive actions in the region, notably attacks by Yemen’s Houthi movement on Saudi Arabian targets. These attacks resulted in four fatalities and eight injuries, including an incident at a civilian airport in Dammam and a drone strike on an oilfield.
Compounding the situation, Iran’s Islamic Revolutionary Guard Corps announced it had targeted four vessels in the northern Gulf, accusing them of illegal oil transfers. Additionally, three more vessels reportedly encountered mines west of the Strait of Hormuz. Iran has cautioned that further provocations might provoke a more extensive response, potentially affecting US regional bases.
The growing unrest has renewed fears over the security of the Strait of Hormuz, a critical artery for global energy shipments. Past disruptions in this region have previously driven oil prices higher, with a notable peak at $126 per barrel in April, before a partial decline spurred by hopes for a ceasefire.
Despite a recovery in oil exports from the Persian Gulf, which have surpassed pre-conflict levels, there are concerns about the stability of global supplies. Increased pipeline shipments to the Red Sea and Gulf of Oman have mitigated some shipping disruptions; however, the recent attacks have injected uncertainty into the market.
The spike in oil prices has also impacted financial markets, with major European and Asian stock indices experiencing declines on Thursday due to worries that rising energy costs could exacerbate inflation and maintain high borrowing costs. In the U.S., American Airlines shares fell after the airline warned that elevated fuel expenses might lead to a financial loss this year, underscoring the broader economic ramifications of the oil price increase.
