Crude Oil Prices Surge as Saudi, Supply Concerns Weigh

Crude Oil Prices Surge as Saudi, Supply Concerns Weigh

Crude oil prices rose Tuesday as disruptions to Saudi Arabia’s oil exports and the risk of further supply disruptions in the Middle East kept markets focused on crude flows from the region.

International benchmark Brent crude futures for November delivery traded at $101.70 a barrel, up 1.4% from the previous close of $100.34. US benchmark West Texas Intermediate (WTI) crude futures for November delivery rose over 1% to $93.35 a barrel from $92.37.

Renewed fighting in Yemen heightened concerns about regional supply routes. Saudi airstrikes on the strategic Red Sea port city of Mokha killed at least six people and injured eight others, according to a report Tuesday by the Houthi-affiliated Saba news agency.

British Prime Minister Andy Burnham, meanwhile, announced that the UK will provide “defensive air-to-air refuelling” support to Saudi Arabia following attacks on the country by Yemen’s Houthi group, according to reports.

Burnham said the decision came after Saudi Arabia requested “military support.” He approved the request following advice from Secretary of State for Defense Wes Streeting and Foreign Secretary Ed Miliband.

Government officials said the support will be “time limited” and is expected, at least initially, to continue “for weeks.” The developments added to concerns that a further escalation in the conflict could put more pressure on energy flows from the region.

However, US President Donald Trump called off planned airstrikes against Houthi targets in Yemen shortly before they were to be carried out, according to US media.

The reversal came by midday Sunday after military commanders had approved target lists and personnel were loading munitions onto aircraft designated for the operation, according to administration officials cited by The New York Times.

Trump initially resisted launching airstrikes during meetings with advisers Wednesday but later ordered the Pentagon to prepare for military action following a phone call with Saudi Crown Prince Mohammed bin Salman on Thursday, the report said.

The prospect of renewed diplomatic contacts between the United States and Iran also limited the rise in oil prices.

Iranian Foreign Minister Abbas Araghchi arrived in New York for the 81st session of the UN General Assembly, while President Masoud Pezeshkian was scheduled to travel to the city Tuesday.

Both officials are expected to hold a series of meetings on the sidelines of the gathering.

Markets are watching the meetings for signs of progress toward renewed talks between Washington and Tehran, which could ease some of the geopolitical risk surrounding oil supplies.

Meanwhile, reports said the US has proposed putting $5 billion into a new fund to help Middle Eastern countries rebuild energy infrastructure damaged in the war with Iran.

The Wall Street Journal, citing US and Middle Eastern officials and documents it reviewed, said Washington is seeking a matching $5 billion contribution from eight Middle Eastern partners — Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait, Oman, Iraq and Jordan — which would bring the total to $10 billion.

The initiative is called the Partnership for Allied Trust and Construction (Pact).

The US Development Finance Corporation would run the fund, according to the report. The agency’s past work has mostly centred on developing countries rather than rich Gulf monarchies.

US officials stressed that discussions are still underway, the terms may change, and it remains uncertain whether any country will sign on. Oil Prices Dip as Saudi Provides Alternative Exports Route