Brent Hits New High, Driven by Middle East Conflict

Crude oil prices closed higher at the end of the week, with Brent reaching its highest level since April as intensified attacks on Saudi Arabia fueled concerns over potential energy supply disruptions. Brent rose to $116.72 per barrel—a 3.1% increase—marking a gain of over 6% for the week, while WTI also closed above $103 per barrel.

The Iran-backed Houthi group claimed responsibility for attacks on the port of Yanbu, oil fields, and airports in Saudi Arabia. This escalation has sparked fears that the conflict could spread to the vicinity of the Strait of Hormuz, a critical artery for global oil trade. Investors also moved to trim short positions ahead of the weekend, anticipating further geopolitical developments.

Tensions have been further heightened by statements from U.S. President Donald Trump, who indicated that the U.S. has exerted significant pressure on Iran and hinted at the possibility of further action. Reports regarding potential new U.S. and Israeli plans to target Iran—following the U.S. midterm elections—have kept a geopolitical risk premium embedded in oil prices.

Meanwhile, oil flows through the Strait of Hormuz have reportedly returned to near pre-war levels. However, shipments of refined products from the Gulf region remain constrained. This has created a complex market environment: while crude oil supplies have relatively recovered, the availability of energy products like diesel remains tight.

Supply pressures have been compounded by Ukrainian attacks on Russian oil refineries. Several governments have begun tapping into strategic reserves to mitigate the impact of supply disruptions, while the Trump administration has sought to curb domestic energy prices through various measures—including a diesel agreement with Russia ahead of the midterm elections.

Newsmaker Analysis: Oil prices retain a bullish bias in the short term, as the geopolitical risk premium remains elevated. The market’s primary focus is whether the escalation in the Middle East will begin to tangibly disrupt oil flows. If the attacks escalate to the point of disrupting supplies or shipping lanes, upward pressure on prices could intensify. Conversely, a restoration of oil flows and an easing of the conflict could potentially trigger a price correction.

Source: Newsmaker.id