Key points
- Brent rose 1.2% to $114.47 a barrel and U.S. crude gained 1.4% to $100.84 on Friday.
- Saudi Aramco ordered its Dhahran headquarters evacuated Thursday as fighting with Yemen’s Houthis intensified.
- Analysts say a geopolitical risk premium is likely to stay in prices even if tensions do not escalate.
Oil prices rose more than 1% Friday after Houthi attacks in Saudi Arabia stoked fears of further disruption to energy supplies from the Middle East.
Brent crude futures climbed $1.30, or 1.2%, to $114.47 a barrel as of 0639 GMT. U.S. West Texas Intermediate futures gained $1.37, or 1.4%, to $100.84.
Brent settled Thursday at its highest level since May 4. It is on course to close higher for a third straight week, while WTI is headed for a second consecutive weekly gain.
Saudi Aramco on Thursday ordered the evacuation of its headquarters in Dhahran, on the Gulf near Bahrain, Reuters reported. Fighting has intensified between Saudi Arabia, the world’s largest crude exporter, and the Yemen-based Houthis.
Clashes between the Houthis and a Saudi-led coalition backing Yemen’s internationally recognized government have raged since the Iran-aligned group pushed toward Bab el-Mandeb. The shipping chokepoint sits at the mouth of the Red Sea.
ING analysts said in a note Friday that markets are increasingly worried about renewed escalation in the Persian Gulf. Such a scenario could threaten oil flows that have so far held up remarkably well, they said.
The analysts called re-escalation “the most likely path” and added that even if tensions ease, the mere possibility is likely to keep a sizable risk premium in prices.
Linh Tran, an analyst at XS.com, said two things matter most now: how much supply is actually disrupted and how long it takes to restore operations. Those factors will decide how much of a risk premium the market will pay, she said. If the attacks continue and delay deliveries, she added, elevated prices will rest on firmer ground.
Libya is adding to the supply worries. An oil pipeline valve carrying crude from the Hamada and Tahara oilfields to Zawiya port has been shut, the head of the National Oil Corporation told Reuters on Thursday. Production has fallen at both fields as a result.
