Oil Prices Surge Above $112 as Middle East Tensions Raise Fears of Supply Disruptions

Global oil prices surged by more than 3% on Thursday, reaching their highest levels in five months as fears of renewed conflict in the Middle East, attacks on shipping in the Strait of Hormuz and Houthi strikes on Saudi oil infrastructure unsettled energy markets.

Analysts warned that oil prices could remain elevated in the near term as prospects for easing regional tensions appeared increasingly uncertain.

According to Reuters, Brent crude futures rose by $3.35, or 3.08%, to $112.17 a barrel on Thursday, marking their highest level since May 18.

US West Texas Intermediate (WTI) crude climbed $2.68, or 2.76%, to $99.83 a barrel.

Tamas Varga, an analyst at PVM Oil Associates, said efforts to ease tensions in Ukraine and the Middle East were losing credibility.

“Attacks on shipping in the Strait of Hormuz and Houthi attacks on Saudi Arabia and its oil infrastructure have become fresh causes for concern,” Varga said, adding that reports of oil exports from the Middle East exceeding pre-conflict levels had been overshadowed by the escalating security risks.

He further warned that there appeared to be little prospect of the conflicts easing before the US midterm elections, suggesting that oil prices could remain high in the coming weeks.

Middle East Oil Exports Under Pressure

Analysts at Morgan Stanley estimated in a research note that approximately 17 million barrels of crude oil were exported from the Middle East each day last week.

However, rising security risks around key shipping routes and energy facilities have raised concerns about the reliability of regional supplies.

The Strait of Hormuz is one of the world's most important energy chokepoints, connecting the Persian Gulf with international markets. Any disruption to commercial shipping through the waterway could affect oil supplies and increase transportation and insurance costs.

The latest price surge reflects growing concerns that further attacks or restrictions on shipping could disrupt exports from major oil-producing countries.

US Orders Some Diplomats to Leave Saudi Arabia

Amid deteriorating security conditions, the United States has taken precautionary measures concerning its diplomatic presence in Saudi Arabia.

US officials said the State Department had ordered some diplomats and their family members at American diplomatic missions in Saudi Arabia to leave the country. Washington was also planning to relocate family members of diplomats from several other US missions across the Middle East.

The measures came after Yemen's Iran-backed Houthi group reportedly launched attacks against several targets in Saudi Arabia on Wednesday.

According to the report, an attack on a civilian airport in Dammam killed at least two people and injured several others. Two more people were reportedly killed in a drone attack on a Saudi oilfield.

The incidents have heightened concerns about the potential for further attacks on civilian infrastructure and energy facilities across the region.

Explosions Reported in Southern Iran

Meanwhile, Iranian media reported hearing explosions in the southern Iranian city of Sirik on Wednesday.

Details about the nature and source of the explosions remained unclear.

The reports added to uncertainty surrounding the regional security situation, with concerns growing that further incidents could intensify the confrontation and threaten energy infrastructure or maritime traffic.

Iran's Revolutionary Guards Issue Warning Over Strait of Hormuz

Iran's Islamic Revolutionary Guard Corps (IRGC) has issued a stern warning over commercial shipping through the Strait of Hormuz.

In a new message, the organisation said commercial vessels attempting to transit the strait with US military assistance without its permission would trigger renewed targeting of American military bases in the Middle East.

The warning has raised further concerns about the security of international shipping and the potential for a wider regional confrontation.

Any escalation around the Strait of Hormuz could have consequences well beyond the Middle East, given the waterway's importance to global oil supplies.

Oil Markets Face Continued Uncertainty

The combination of escalating regional tensions, threats to commercial shipping and attacks on energy infrastructure has increased uncertainty across international oil markets.

Higher crude prices could translate into increased fuel costs, transportation expenses and inflationary pressures for economies that rely heavily on imported energy.

For oil-importing countries, a sustained price increase could also put additional pressure on foreign exchange reserves and government spending, depending on domestic fuel pricing policies and subsidy arrangements.

Analysts caution that the direction of oil prices will depend heavily on developments in the Middle East, the security of shipping through the Strait of Hormuz and whether diplomatic efforts can reduce the risk of further escalation.

Unless the security situation improves, oil markets could remain volatile, with prices vulnerable to further increases if supplies or shipping routes face additional disruption.