Middle East Conflict Drives Oil Prices to Multi-Week Highs

The global energy market is facing a deepening crisis as tensions in the Middle East escalate. The Strait of Hormuz, through which more than one-fifth of the world's oil and liquefied natural gas supplies pass, has seen vessel traffic plummet to just seven vessels on Thursday from 11 the day before. This follows a series of attacks by Iran-backed militias on Saudi targets, including the capture of Yemen's port of Mocha.

Saudi Arabia, the world's top crude oil exporter, has been using the Bab al-Mandeb Strait in the Red Sea to export most of its crude from its west coast shipping terminal at Yanbu. However, this route is now also under threat due to Houthi attacks on Saudi targets and the capture of Mocha port by Houthi militias.

The International Energy Agency (IEA) reported that Saudi Arabia's crude supply fell 2.3 million barrels per day in August to its lowest level in more than three decades, at 6m bpd. The agency also warned that normal oil flow from the Middle East may not return until 2027.