Brent Hits $112 as Saudi Attacks and Hormuz Strikes Rattle Oil Market

Brent crude rose 3% to $112 a barrel on Thursday, its highest level since 18 May, after attacks in Saudi Arabia and strikes on tankers near the strait of Hormuz threatened new disruptions to global crude supply.

The benchmark had not traded at that price in five months. The move came within 24 hours of a wave of attacks across the Gulf region that killed at least four people.

Who attacked what?

Yemeni Houthis, who are aligned with Iran, hit several targets inside Saudi Arabia on Wednesday. Two people were killed and eight wounded at a civilian airport in Dammam. A separate drone attack on a Saudi oilfield killed two more.

The Iranian Islamic Revolutionary Guard Corps (IRGC) said its forces tracked and struck four vessels involved in what it called "illegal" oil transfers in the northern Gulf. The vessels caught fire. The IRGC added that three more ships collided with mines west of the strait of Hormuz.

The IRGC also issued a warning to the United States: continued provocations could trigger a wider response against American regional bases.

How are governments and companies responding?

The US has ordered some diplomats and family members to leave their missions in Saudi Arabia, Reuters reported. Washington also plans to withdraw family members from a number of other Middle East missions.

Saudi Aramco has instructed staff to evacuate its headquarters in Dhahran and work remotely, according to Reuters. That order touches the nerve center of the world's largest oil exporter.

Why does this echo earlier crisis fears?

Concern is growing that the regional conflict could escalate further, almost eight months after Tehran's effective block on the strait of Hormuz triggered what many feared would be the greatest energy supply disruption in the market's history.

In the first weeks after the US-Israeli attacks on Iran, oil surged past $100 a barrel. Market observers predicted prices of up to $150 as flows through Hormuz came to a halt.

The price record tells the story of the conflict's arc:

• Oil peaked at $126 a barrel in April.
• It fell below $100 in late May.
• It hit a low of $71 at the start of July, amid ceasefire hopes.
• It began climbing again after the US-Iran memorandum of understanding collapsed and fresh hostilities broke out in the Gulf.

What do the supply numbers actually show?

The price rally collides with a surprising data point. Kpler figures show that oil exports from the Persian Gulf have risen above their prewar levels.

The recovery is partly mechanical. Exporters have increased oil pumped overland through pipelines to the Red Sea and the Gulf of Oman, bypassing the chokepoint at Hormuz.

That means physical supply is flowing even as fear premium builds. Traders are pricing the risk of future disruption, not a current shortage.

How did markets react?

Global stocks wobbled on Thursday as investors braced for higher inflation and borrowing costs.

European equities led the declines in the region:

• The Stoxx Europe 600 fell 1%.
• The UK's FTSE 100 dropped 0.7%.

Asia fared worse:

• Japan's Nikkei 225 dropped 2.7%.
• South Korea's Kospi fell 3.5%.
• Hong Kong's Hang Seng shed 3%.

The pattern is a classic oil-shock trade: energy gains, equities fall, and rate-cut expectations recede.

What comes next?

The gap between booming Persian Gulf exports and a five-month price high now hinges on one variable: whether the attacks on shipping and Saudi infrastructure mark a new escalation or a passing flare. The US drawdown of diplomatic staff and Aramco's evacuation order suggest both governments read the threat as serious.