Brent oil trades above US$107 as Houthi-Saudi fighting escalates

BRENT oil held above US$107 a barrel after fighting between Yemen-based Houthi militants and Saudi-backed forces intensified, stoking fears of deeper supply disruptions as hostilities escalated across the Middle East.

The global benchmark surged more than 6 per cent in the previous session and is on track for its biggest weekly gain since July.

West Texas Intermediate traded near US$102 a barrel. Iran-backed Houthis advanced toward coastal areas bordering the strategic Bab al-Mandeb Strait, gaining ground in their push to seize Mokha near the southern end of the Red Sea.

“A resumption of a full-blown Saudi-Houthi war would be a potential catalyst for our high oil price scenario coming to fruition,” RBC Capital Markets analysts including Helima Croft wrote in a note.

Mokha is closer to the Bab al-Mandeb Strait and “would allow the group to project its disruptive capabilities further south towards the narrowest points of the waterway”.

Fighting has intensified across the Middle East over the past two weeks, with Houthi assaults on Saudi energy facilities forcing some operations to halt and US strikes targeting Iranian oil tankers.

A recent pickup in crude purchases by China has also tightened the global market.

Some oil exports continue to cross the Strait of Hormuz, often on tankers sailing with their transponders switched off to evade detection, though vessels still face the constant threat of attack.

The UK Maritime Trade Operations received a report that two ships were struck by unidentified projectiles west of Khasab, Oman, on Sep 10, highlighting the continuing dangers to shipping.

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Oil hits US$105 as Middle East flareup heightens supply worries

Iran and the US are settling in for a prolonged conflict, with little sign of a near-term truce or normalised Middle East energy flows.

Houthi rebels opened up a new front in July, threatening vessels calling at Saudi Red Sea ports that had become a vital alternative after disruptions through Hormuz.

Saudi Arabia said oil output fell again last month, reaching the lowest level since 1990.

Brent crude is up almost 80 per cent this year, although the benchmark remains below its wartime peak of just above US$126 a barrel reached in April.

European natural gas prices have also rallied, while refined products such as diesel have posted even steeper gains, compounded by the Russia-Ukraine war.

“Market participants appear to be revising their expectations for the severity and duration of the war in Iran,” said Hamad Hussain, a commodities economist at Capital Economics.

With global inventories depleted and Chinese demand showing early signs of recovery, a renewed disruption in Middle East flows could push prices back towards recent peaks, he added.

The US is seeking to cripple Iran’s economy, and US Treasury Secretary Scott Bessent said a “large bank” will be sanctioned on Monday as part of the campaign, which includes a naval blockade.

An Iranian official recently acknowledged growing economic pain, but said Teheran must keep fighting until it is confident Washington will not strike again.

Iran has been able to rebuild its missile capabilities and will escalate strikes on US and Gulf assets if Washington intensifies its own attacks, a senior Iranian official said.

White House advisers including Vice-President JD Vance have told US President Donald Trump that the war could drag on through the remainder of his term, which runs until January 2029, the Wall Street Journal reported. BLOOMBERG