Brent Above $100: Houthi Attacks and Gulf Storm
Brent is back above $100 as Houthi attacks on Saudi Arabia and a Gulf of Mexico storm tighten the oil supply outlook.
Key Takeaways
- Brent is back above $100 after fresh Houthi attacks on Saudi Arabia.
- A tropical storm in the Gulf of Mexico threatens U.S. output and refineries.
- Gulf export volumes are recovering, but supply risks remain.
Brent trades near $101.5 a barrel on Wednesday, with WTI at $90.14. Prices had eased on Tuesday but turned higher after new reports of attacks on Saudi energy infrastructure. At the same time, oil majors are pulling staff from Gulf of Mexico platforms ahead of an approaching storm.
Houthi attacks push Brent back through the $100 mark
The reversal was triggered by reports of new Houthi strikes on Saudi Arabia. According to OilPrice.com, Saudi aviation authorities confirmed attacks on two airports, including the one in Jazan, home to an Aramco refinery with 400,000 barrels a day of capacity. Over the weekend the Houthis also claimed a strike on an Aramco facility in Riyadh; the Saudi-led coalition called that account misleading.
Energy Minister Prince Abdulaziz bin Salman pushed back: the East-West pipeline, Riyadh's bypass around the Strait of Hormuz, is again moving 5.8 million barrels a day. Loadings at the Red Sea port of Yanbu are resuming after a repair pause.
Meanwhile, Yemen's internationally recognized government has launched an offensive against the Houthis. The rebels hold most of the western coast along Bab el-Mandeb, the chokepoint between the Red Sea and the Gulf of Aden. If tankers divert via Suez, the Mediterranean and the Cape of Good Hope, delivery times for Saudi crude to Asia grow by about a month, OilPrice.com reports.
A Gulf of Mexico storm adds a second disruption
Citing Reuters, OilPrice.com reports that Chevron is evacuating non-essential staff from all its Gulf of Mexico platforms. Shell is partly clearing six offshore platforms, and BP is following. Production is running normally for now. The storm could reach the coast by Friday and strengthen into a Category 2 hurricane.
U.S. Gulf Coast refining capacity stands at 14.1 million barrels a day, about half the national total. Up to six plants could be affected. The platforms contribute roughly 15 percent of U.S. crude output and 5 percent of gas output. KCM Trade analyst Tim Waterer called the storm an unwelcome complication for an already nervous supply picture, as quoted by Reuters.
More Gulf oil, but expensive logistics
Supply is improving noticeably. Trader Vitol puts exports from the Persian Gulf at around 12 million barrels of crude and 2 million barrels of fuels per day. ING's commodity analysts describe a tug-of-war between better supply and lingering threats, and see sustainably lower prices only if those risks are addressed.
Shipping stays costly. Supertanker rates run above $1 million a day, according to Sparta Commodities, and the costs are spreading to smaller vessels. For investors, more output does not automatically lower prices while the route to the customer remains uncertain.
What momentum says
Trading Department's momentum model signals a mixed picture for Brent crude at $101.79. It shows bullish momentum on the hourly and weekly timeframes and neutral momentum on the 4-hour and daily. Short-term impulse and the broader trend both point up, while the middle timeframe does not yet confirm it.
Scenarios
If Brent slips back below $100 after the jump, the market would lean on reported Gulf export volumes and the recovery of the Saudi pipeline. That would point to calmer trading.
If Brent holds the $100 mark while the storm moves closer to the U.S. coast, supply worries gain weight: refinery outages would hit a fuel market that OilPrice.com already describes as under strain.
If the Yemen conflict escalates and sea lanes at Bab el-Mandeb become less safe, freight costs and risk premiums stay high. That would support oil prices regardless of production volumes.