Brent crude hits more than five-month high on concern over Middle East escalation

LONDON: Oil prices rose on Friday, with Brent crude touching a more than five-month high, after Houthi attacks in Saudi Arabia stoked concern over further disruption to energy supplies from the Middle East.

Brent crude futures gained $1.40, or 1.2%, to $114.57 a barrel by 1138 GMT, having earlier reached $115 for the highest level since May 4. US West Texas Intermediate crude gained $1.48, or 1.5%, to $100.95.

The Brent benchmark is on track for a third consecutive weekly gain, of 4.2%, while WTI is poised to finish 0.5% down on the week.

Saudi Aramco on Thursday ordered the evacuation of its headquarters in Dhahran on the Gulf near Bahrain, Reuters reported, as fighting intensified between the world’s largest crude exporter and Yemen-based Houthis.

“The market remains concerned about a potential escalation, which, in a worst-case scenario, could trigger renewed supply disruptions,” said UBS analyst Giovanni Staunovo, adding that volatile oil flows and elevated freight rates have left the market undersupplied.

Clashes between the Houthis and Yemen’s government have raged since the Houthis pushed towards Bab el-Mandeb, a shipping ​chokepoint at the mouth of the Red Sea.

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“The key factors to monitor now are the extent of actual disruption and the time needed to restore operations, as these will ultimately determine how much of a supply risk premium the market is willing to pay,” said XS.com analyst Linh Tran.

“If attacks persist and delay deliveries, elevated prices will have a firmer foundation.”

An oil spill from a tanker was detected off the coast of Umm Al Quwain, prompting containment operations and environmental assessments, the United Arab Emirates Ministry of Climate Change and Environment said on Friday. The ministry did not say what caused the spill and authorities have not identified the tanker involved.

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In Libya, an oil pipeline valve from the Hamada and Tahara oilfields to Zawiya port has been shut, leading to a reduction in production at both fields, the head of the National Oil Corporation told Reuters on Thursday.

Meanwhile, the first Russian diesel bound for the US since a surprise agreement between Moscow and US President Donald Trump is aboard a tanker heading for New York, ship-tracking data showed on Friday.

Trump announced the deal this month as part of his efforts to bring down soaring diesel prices ahead of US midterm elections next month.