Oil prices rise more than 1% as supply concerns linger

Oil prices rose over 1% on Friday after Houthi attacks in Saudi Arabia stoked concerns of further disruption to energy supplies from the Middle East.

Brent crude futures climbed $1.30, or 1.2%, to $114.47 a barrel as of 0639 GMT, while US West Texas Intermediate crude futures rose $1.37, or 1.4%, to $100.84.

Brent, which settled at its highest since May 4 on Thursday, is set to close higher for a third successive week, while WTI is on track to finish higher for a second straight 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.

“Markets are increasingly worried about renewed escalation in the Persian Gulf, a scenario that could threaten oil flows that have so far remained remarkably resilient,” ING analysts said in a note on Friday. “Re-escalation seems the most likely path.

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Even if tensions don’t re-escalate, the mere possibility is likely to keep a sizeable geopolitical risk premium embedded in prices.“

Clashes between the Houthis and a Saudi-led coalition that backs Yemen’s internationally recognised government have raged since the Iran-aligned Houthis pushed towards Bab el-Mandeb, a shipping chokepoint at the mouth of the Red Sea.

“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 Linh Tran.

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

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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.