Oil prices rose sharply on Thursday as escalating violence in the Middle East heightened concerns over potential disruptions to global energy supplies. The increase followed intensified attacks in the region, particularly involving Iran-backed Houthi forces in Yemen and recent assaults on tankers near critical shipping routes.
Early Thursday, the Houthi militia claimed responsibility for a ballistic missile strike on Riyadh’s airport in Saudi Arabia’s capital, marking a further escalation in the conflict between the Houthis and the Saudi-led coalition. This development added to existing risks associated with transporting Saudi oil through the Red Sea, a key alternative route to the Strait of Hormuz, which has been a focal point of regional tensions.
Brent crude, the international benchmark for oil prices, surged by around 4 percent, surpassing $105 per barrel before easing slightly following remarks by U.S. President Donald Trump. On his social media platform, Trump indicated that the United States would not initiate military action against Iran before the upcoming midterm elections, helping to temper some market fears.
At the same time, attacks on tankers in and around the Strait of Hormuz have increased sharply in recent days. The strait, a vital artery for nearly 20 percent of the world’s oil supply pre-conflict, has experienced at least eight tanker attacks this week, according to maritime security reports. One tanker north of Qatar was struck by multiple projectiles, including drones, resulting in casualties, while another vessel near Fujairah in the United Arab Emirates sustained damage and possible oil leakage. These incidents underscore the elevated risks faced by maritime traffic in the Persian Gulf region.
Analysts noted that market jitters were compounded by the geopolitical climate and by U.S. statements concerning Iran. While President Trump suggested that hostilities would not escalate imminently, his earlier threats had already contributed to increased oil market volatility.
The combination of conflict-related supply threats and other factors also influenced investor behavior more broadly, with stock markets in the U.S., Europe, and Asia retreating modestly. Meanwhile, U.S. Treasury yields, which affect borrowing costs for households and businesses, spiked to levels not seen since 2020 amid expectations of further interest rate hikes aimed at curbing inflation.
In addition to geopolitical risks, U.S. energy infrastructure faced short-term pressures from Tropical Storm Isaias, which prompted shutdowns of approximately 15 percent of Gulf Coast oil production. However, some energy experts viewed the storm’s impact as limited relative to the broader geopolitical challenges.
Geopolitical risk consultants highlighted that despite heightened rhetoric and sporadic attacks, the conflict between the U.S. and Iran has largely remained contained, with limited direct military engagement. Some analysts see this as a calibrated approach by the U.S. to apply economic and strategic pressure on Iran ahead of possible future negotiations.
Overall, these developments reflect a complex and fluid situation in the Middle East that continues to influence global energy markets and financial conditions worldwide.