Brent nears $117 a barrel as Houthi strikes and Iranian threats lift oil prices

Brent approaches 117 dollars

Brent crude traded at 116.9 dollars a barrel on Friday, 23 October, after gaining more than 3.3% during the session, according to the latest figures available. West Texas Intermediate stood at 103 dollars, up 3.5% intraday. Earlier on Friday morning, Brent had been at 114.72 dollars, its highest level since May. The last time Brent reached the current level was 30 April, about two months after the US-Israeli offensive on Iran began.

The move reflects anxiety about supply more than present market conditions. Analysts at ING Think, Warren Patterson and Ewa Manthey, said markets are increasingly uneasy about a fresh escalation in the Persian Gulf that could disrupt oil flows, which have so far held up well. Reports suggest Donald Trump is weighing new strikes on Iran while reinforcing US forces in the region with another aircraft carrier.

Richard Hunter, an analyst at the broker Interactive Investor, tied the price rise directly to the reports about US plans.

Widespread reports that the US is considering renewed military strikes on Iran after the midterm elections rather than pursuing a diplomatic route was enough for the price to pop

Houthi strikes on Saudi Arabia

Houthi rebels in Yemen have intensified attacks on Saudi infrastructure in recent weeks, which the rebels say is a response to the coalition's support for a large-scale government offensive announced in early October. Their military spokesman, Yahya Sari, described four 'high-level' operations within 48 hours using ballistic missiles and drones. The targets included the Defense Ministry headquarters in Riyadh, the international airports of Dammam and Abha, and the Yanbu refinery on the Red Sea. Sari said the strike on Yanbu was a direct hit that caused a fire. The Saudi-led coalition said it intercepted two drones in the south of the country and a missile aimed at the capital.

Saudi Aramco ordered the evacuation of its headquarters in Dhahran on Thursday and asked employees to work remotely because security had deteriorated. The company's move came as tensions rose across the kingdom. The US State Department also ordered some diplomats and the families of US government employees to leave Saudi Arabia.

Iran's threats to Gulf infrastructure

Mohsen Rezaei, secretary of Iran's Supreme National Security Council, told Drop Site News that Iran would strike oil facilities in up to seven Gulf countries, along with undersea telecommunications cables, data centres and artificial intelligence facilities, if the US and Israel launch a new campaign of massive bombing. Army commander Amir Hatami said Iran is fully prepared for asymmetric warfare. Mehdi Mohammadi, an adviser to Iran's negotiator and to the parliament speaker, called a next conflict an existential threat and described Iran's line as 'zero red lines'. Iran's Revolutionary Guards also claimed to have struck four commercial ships in the Strait of Hormuz in the week of 19 October, with sources giving either Wednesday, 21 October, or Thursday, 22 October, as the day of the attack.

Blockade, midterms and the election calendar

US Central Command said the naval blockade of Iranian ports, imposed more than three months ago during an April ceasefire, had kept Iran from exporting crude worth at least 25,000 million dollars, about 22,120 million euros. CENTCOM added that the blockade limits the Revolutionary Guard's capacity to finance militias, criminal networks and terrorist activity. US ambassador to the United Nations Mike Waltz told the Financial Times that Washington could still be in a blockade standoff with Iran a year from now without a nuclear deal, and that the navy can maintain it indefinitely. Trump has ruled out negotiations with Tehran for now and has promised not to attack Iran at least until after the 3 November midterm elections. Israel holds its legislative elections on 27 October, and El Pais reported that Trump and Benjamin Netanyahu discussed a new bombing campaign in early October.

Shipping, spills and supply risks

Iran has declared the Strait of Hormuz closed and says it is safe to cross only through routes authorised by its armed forces. The United States says it does not block the strait because it controls it militarily, a presence limited to the outer part of the passage. Traffic through the strait remains moderate. Iran says seven oil tankers caught fire or sustained damage in and around the strait. In the United Arab Emirates, authorities temporarily closed beaches and coastal areas at Umm Al Quwain after an oil spill from a tanker whose origin has not been established. In Libya, the state oil company warned that closing a valve on a pipeline could force it to halt production from the fields it supplies unless the flow of crude is restored.