Brent crude extended its rally towards $109 a barrel as fighting between Iran-backed Houthi militants and Saudi-backed forces intensified in Yemen, adding another threat to Middle East oil flows already disrupted by the wider US-Iran conflict.
Brent futures rose after gaining more than 6% in the previous session, while West Texas Intermediate traded around $103. The global benchmark has surged nearly 30% from its early-August lows and is on course for its strongest weekly gain since July.
The latest escalation centres on the Bab el-Mandeb Strait, a key shipping chokepoint linking the Red Sea with the Gulf of Aden. Houthi forces seized the Yemeni port city of Mokha on Thursday and advanced towards strategic islands, according to military sources, strengthening their position near the strait.
ALSO READ: D-Street Set For Red Friday? GIFT Nifty Plunges 130 Points As Crude Oil Hits $107
The development has raised fresh concerns for oil markets because the Red Sea route has become particularly important as shipments through the Strait of Hormuz remain severely disrupted. Any further deterioration around Bab el-Mandeb could increase shipping risks and put additional pressure on already-tight energy supplies.
The Houthi advance follows attacks on Saudi energy infrastructure that have forced some operations to halt. Saudi Arabia has also reported a sharp drop in crude production, while the broader conflict has disrupted tanker traffic and pushed refiners and traders to secure supplies.
Oil prices have also received support from stronger Chinese crude buying, which has tightened physical markets. However, higher prices are beginning to squeeze smaller Chinese refiners, potentially forcing them to reduce processing rates and limiting demand growth.
The latest surge has pushed Brent more than 70% higher this year, although prices remain below the wartime peak of just above $126 a barrel reached in April. Refined products, particularly diesel, have risen even more sharply, with the Russia-Ukraine conflict adding to supply pressures.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.