Oil prices surged toward $100 a barrel on Tuesday after Iran-backed Houthi militants launched an attack on Saudi Arabia that Saudi officials said injured dozens of civilians, marking a major escalation in a Middle East conflict that continues to disrupt global energy markets, the New York Times reported from London.
Brent crude, the international benchmark, rose above $99 a barrel during the day, its highest level since late July, shortly after Houthi forces declared a maritime blockade on Saudi Arabia and began targeting Saudi tankers with missiles and drones, according to the newspaper. Analysts told the New York Times that the price reflects growing recognition in the market that there is no end in sight to a conflict that has disrupted oil flows through two critical routes, the Strait of Hormuz and the Red Sea.
Dozens injured in latest strike
Tuesday's attack injured 73 civilians in the south of Saudi Arabia, according to Saudi authorities, who said they would take all necessary measures to respond. The Saudi energy ministry said in a statement that the strikes on energy facilities in the south of the country caused fires at some locations and temporarily disrupted operations, though it did not say who was responsible for the attacks, the New York Times reported.
"Oil market participants now pricing in a more prolonged disruption to shipping flows," Hamad Hussain, a senior economist at the research firm Capital Economics, told the newspaper. Hussain and other analysts have raised their oil price forecasts in response to the expectation of further disruption, according to the New York Times.
A market shaped by war
The global oil market has faced repeated shocks since the war began on 28 February, when the United States and Israel launched joint strikes on Iran, the New York Times reported. The Strait of Hormuz, once responsible for carrying 20% of the world's oil, now handles only a fraction of its normal traffic as shippers face the threat of attack, according to the newspaper. Houthi strikes have further disrupted Saudi Arabia's efforts to move crude through the Red Sea, it added.
Capital Economics, which had predicted prices would fall this year even after a brief ceasefire between the United States and Iran collapsed, has since revised its outlook, the New York Times reported. In a note issued last week, the firm's analysts said they now expect prices to remain around $100 a barrel for the rest of the year. "With a swift resolution to the Hormuz crisis looking unlikely, our new working assumption is that energy flows from the Middle East only return to pre-war levels early next year," the analysts wrote, according to the newspaper.
Goldman Sachs offered a starker warning still, raising the prospect in a note of oil prices reaching $120 a barrel should shipping attacks in the Middle East intensify further, the New York Times reported.
Source: The New York Times
