Print

Global crude oil futures advanced to fresh six-week highs on Tuesday, propelled by heightened supply disruption risks after Houthi drone and missile strikes set Saudi Arabian energy installations ablaze, threatening export routes beyond the blockaded Strait of Hormuz.

Brent crude rose 92 cents, or 0.9%, to settle at $97.92 a barrel, marking its highest close since 23 July. US West Texas Intermediate (WTI) crude gained $1.55, or 1.7%, to finish at $93.03 a barrel, its strongest settlement since 4 June.

The uninterrupted advance pushed both crude benchmarks further into technically overbought territory.

Upstream risk premiums escalated sharply following Houthi attacks across southern Saudi Arabia, which triggered retaliatory Saudi airstrikes in Yemen. The strikes raised alarm over the vulnerability of Saudi Arabia’s Red Sea pipeline bypass systems, designed to circumvent the Strait of Hormuz where daily commodity transits dropped to seven vessels on Monday. With maritime chokepoints increasingly impaired, investment banks including Goldman Sachs and HSBC raised their crude price forecasts through 2027 on expectations of protracted regional logistics disruptions.

However, crude pared earlier intraday gains under mounting macroeconomic pressure. Persistent refinery outages across the Middle East and Russia have driven global diesel and gasoline prices to historic highs, intensifying inflation fears and lifting market-implied odds of a US Federal Reserve interest rate hike next week to 60%.

Gains were further capped by diplomatic signals between Washington and Moscow regarding a potential framework to end the war in Ukraine, as well as demand softness in China, where August crude imports tumbled 23.4% year-on-year despite modest month-on-month recovery.

Written by: Aiman Haikal