Brent crude surged by about 5% to above $108 a barrel, as fresh military action between Saudi Arabia and Yemen's Iran-backed Houthi group revived fears of further disruption to Middle Eastern energy supplies.
The latest escalation came after the Houthis said they had attacked Saudi military positions in Jazan, while Saudi authorities reported intercepting missiles launched towards Yanbu, a key Red Sea port and an important alternative outlet for Saudi crude when shipments through the Strait of Hormuz are disrupted.
The renewed violence is particularly significant for oil markets because Saudi Arabia has been relying more heavily on routes outside Hormuz amid the wider US-Iran conflict.
Saudi crude exports through alternative channels have already become a major focus for traders as disruptions to the strategic waterway have complicated regional supply logistics.
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Reuters reported earlier that Saudi crude shipments had recovered to more than 4 million barrels per day in September, while vessel traffic through Hormuz remained sharply below pre-war levels.
Oil prices had been under pressure earlier in the week on hopes that diplomacy could ease the conflict and improve energy flows. The latest attacks have pushed that optimism aside, increasing the premium investors are assigning to potential supply disruptions.
Concerns are also spreading beyond Hormuz. The Houthis have expanded their activity along the Red Sea, threatening another important route for oil and shipping. Earlier attacks had already affected Saudi energy infrastructure, including the East-West pipeline that provides a key route to the Red Sea.
Iran has meanwhile warned that the conflict could widen further. An adviser to Iran's Supreme Leader said Tehran could extend the war into the Indian Ocean if the US or Israel launches another attack, adding to uncertainty over the security of regional shipping lanes.
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For oil traders, the focus is now on whether the latest Saudi-Houthi escalation remains contained or causes fresh damage to energy infrastructure and shipping routes. Any prolonged disruption could keep crude prices elevated and add to inflationary pressures globally.
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