Crude Oil Prices Soar Amid Escalating Middle East Hostilities

Crude oil prices have surged to a three-month high due to escalating hostilities in the Middle East. The US destroyed five Iranian tankers carrying crude in response to Iran's attempt to hit US Navy ships with ballistic missiles, prompting concerns of further disruptions to global oil supplies.

The Houthi rebels in Yemen targeted energy facilities in Saudi Arabia, forcing several oil facilities to halt production. Saudi Arabia's 400,000 bpd Jazan refinery was attacked again on Tuesday, and the rebels launched attacks at Saudi Aramco facilities in Abha and Najran, causing fires and injuring people.

Global oil markets are tightening due to the loss of about 2 million bpd from crude exports in the Middle East and a further 2 million bpd from Russia as a result of Ukraine's drone attacks. Saudi Arabia's Aug crude exports dropped to about 3 million bpd, the lowest amount in 9 years.

The International Energy Agency (IEA) warned that the global oil supply deficit will worsen, even as oil demand takes a hit from the war and high prices. The IEA said global oil inventories will fall in Q3 at twice the previously estimated rate due to ongoing disruptions from the US-Iran war.

OPEC delegates approved their final increase of +188,000 bpd in crude production for September, but OPEC's Aug crude production fell by -900,000 bpd to 19.91 million bpd.