Middle East Tensions Drive Crude Oil Prices to Four-Month High

Crude oil prices have surged to a four-month high following escalating tensions in the Middle East. Iran's Revolutionary Guard Corps warned of expanding the war into the Indian Ocean if attacked by the US or Israel, dimming hopes for a deal to reopen the Strait of Hormuz.

The conflict has disrupted global energy flows through the Strait, with Saudi Arabia shutting down its key East-West pipeline in response to Houthi rebel attacks. The 750-mile-long pipeline carries 7 million bpd of crude and was closed as a precautionary measure.

Yemen's Houthi rebels have also targeted Saudi Arabian energy facilities, forcing several oil production sites to halt operations. This has contributed to concerns about tighter oil supplies from the Middle East, with global oil markets continuing to tighten due to losses in crude exports from the region and Russia.

Data compiled by Bloomberg shows that Saudi Arabia's August crude exports dropped to around 3 million bpd, the lowest amount in nine years. The International Energy Agency (IEA) has warned of a significant drop in global oil demand this year, while OPEC delegates have approved an increase in crude production for September.