Oil prices climbed about 2% on Tuesday to a five-week high, on worries that energy supply disruptions could worsen in the Middle East due to more attacks between the U.S. and Iran and a threatened naval blockade of Saudi Arabia by Yemen’s Houthis.
Brent futures rose $2.12, or 2.4%, to $91.34 a barrel at 10:53 a.m. EDT (1453 GMT). U.S. West Texas Intermediate crude rose $1.80, or 2.2%, to $85.03.
Brent was on track for its highest close since June 10, WTI for its highest since June 11. Brent was in technically overbought territory for a seventh day in a row.
Two oil tankers carrying Saudi crude to Asia reversed course in the Red Sea on Tuesday after threats from Yemen’s Iran-aligned Houthis.
U.S. forces bombed targets in the south and west of Iran overnight, Tehran targeted U.S. sites in Bahrain, Kuwait and Jordan and at least one tanker was hit in the Strait of Hormuz.
“The optimist may see the latest American attacks as a last attempt to strengthen the negotiating position before a compromise is reached and the Strait of Hormuz is reopened,” an SEB Research note said.
“However, the risk is a more prolonged stalemate, with continued uncertain energy flows, higher oil prices and recurring attacks.”
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The announced naval blockade on Saudi Arabia on Monday, expanding the conflict and raising the threat to global energy supplies and trade beyond the Gulf.
The two tankers, which loaded Saudi crude bound for China and India this week, made U-turns and were headed toward the Suez, shipping data on LSEG showed. However, sources said Saudi Arabia’s was operating normally.
“The threats of a naval blockade on Saudi Arabia by the Houthis are significant because they raise the risk of disruption to another major oil exporter,” said Tim Waterer at KCM Trade.
Crude oil exports from Saudi Arabia fell for a third straight month in May to a record low, data from the Joint Organizations Data Initiative (JODI) showed on Tuesday.
In Asia, meanwhile, fuel oil markets extended gains on Tuesday on worries about the Houthi naval blockade threat against Saudi Arabia through the Red Sea’s southern gateway.
U.S. OIL INVENTORIES
The oil market waited for weekly storage reports from the American Petroleum Institute (API) trade group later on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday.
Analysts estimated energy firms pulled 0.5 million barrels of crude from storage during the week ended July 17.
If correct, that would be the second week of declines in a row and compares with a decrease of 3.2 million barrels in the same week last year and an average decline of 1.2 million barrels over the past five years (2021 to 2025).
