Brent heads for record monthly leap as Houthi attacks widen Gulf conflict

LONDON: Oil prices extended gains on Monday, with Brent heading for a record monthly rise, after Yemeni Houthis launched their first attacks on Israel, widening the U.S.-Israel war against Iran.

Brent crude futures jumped $1.98, or 1.8%, to $114.55 a barrel by 1250 GMT after settling 4.2% higher on Friday. U.S. West Texas Intermediate was up $1.14, or 1.1%, at $100.78 after a 5.5% gain in the previous session.

Boosting prices, U.S. President Donald Trump issued another warning to Iran on Monday to open the Strait of Hormuz or risk U.S. attacks on its oil wells and power plants.

US and Iraq to ‘intensify cooperation’ against attacks

“Great progress has been made, but if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately ‘Open for Business,’ we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island,” Trump wrote in a social media post.

As more U.S. troops arrived in the Middle East, Trump had said earlier that the U.S. and Iran have been meeting “directly and indirectly” and that Iran’s new leaders have been “very reasonable”.

However, the Israeli military said on Monday that it was attacking the Iranian government’s infrastructure throughout Tehran.

Previously, Trump said he would pause attacks on Iran’s energy network until April 6.

‘Market looking for concrete signs of de-escalation’

“Trump’s extended deadline of April 6 – when the U.S. could potentially resume attacks on Iranian energy infrastructure – has had no reassuring effect. The market is now asking for concrete signs of de-escalation, not just rhetoric,” SEB Research said in a note.

Brent has soared by about 58% this month, the steepest monthly jump in LSEG data going back to 1988, exceeding gains made during the 1990 Gulf War. U.S. crude, meanwhile, has climbed by 50% for its biggest monthly gain since May 2020.

The huge gains have been propelled by Iran’s effective closure of the Strait of Hormuz, a conduit for a fifth of the world’s oil and gas supplies.

The conflict launched on February 28 with U.S. and Israeli strikes on Iran has spread across the Middle East, raising concern about shipping lanes around the Arabian Peninsula and the Red Sea.

Trump extends deadline for striking Iran’s energy plants into April

The Israeli military said on Monday that Iran launched multiple waves of missiles at Israel and an attack had also been launched from Yemen for only the second time since the war began.

“The conflict is no longer concentrated in the Persian Gulf and around the Strait of Hormuz, but now extends into the Red Sea and the Bab el-Mandeb — one of the world’s most crucial chokepoints for crude and refined product flows,” JP Morgan analysts led by Natasha Kaneva said in a note.

Saudi crude exports redirected from the Strait of Hormuz to the Yanbu port in the Red Sea reached 4.658 million barrels per day last week, data from analytics firm Kpler showed.

If exports from Yanbu were disrupted, Saudi oil would need to pivot toward Egypt’s Suez-Mediterranean (SUMED) pipeline to the Mediterranean, JP Morgan analysts said.

Attacks in the region escalated over the weekend and damaged Oman’s Salalah terminal despite efforts to start ceasefire talks.

Iran says it is ready for US ground attack

Iran said it was ready to respond to a U.S. ground attack, accusing Washington on Sunday of preparing a land assault even as it sought negotiations.

Pakistan’s Foreign Minister Ishaq Dar said they had covered possible ways to bring an early and permanent end to the war in the region as well as potential U.S.-Iran talks in Islamabad.

Separately, Vietnam’s Binh Son Refining and Petrochemical said on Monday that it was in talks with Russian partners to buy crude oil. The company said it would also buy more crude from Africa, the U.S. and Southeast Asia.

The European Union faces no immediate supply shortages, but there is tightening in diesel and jet fuel markets, an EU briefing document showed on Monday. EU energy ministers will hold talks on Tuesday on how to coordinate their response to the disruption, the document showed.