Oil Prices Soar on Saudi Attacks and Iranian Threats
Oil prices surged to multi-week highs on Tuesday after Iran-backed Houthi attacks on Saudi energy facilities and Tehran's threat of 'economic warfare' against the United States. Brent crude futures rose $2.00, or 2.06%, to $99.00 a barrel by 0800 GMT, while U.S. West Texas Intermediate crude was at $94.41 a barrel, up $2.93, or 3.2%. According to Tim Waterer, chief market analyst at KCM Trade, the price action reflects both genuine physical tightness and a clear geopolitical risk premium.
The attacks halted operations at some energy facilities in Saudi Arabia, the world's top oil exporter, wounding 73 people, as described by Saudi authorities as a 'dangerous escalation'. Iran threatened the United States with 'economic warfare' and said it had fired an advanced missile at U.S. warships, underscoring the risks of further escalation.
Shipping traffic through the Strait of Hormuz slowed after Iran threatened retaliation for any new U.S. attacks, handling about one-fifth of global daily oil and liquefied natural gas supplies before the conflict began in late February. Analyst Daniel Hynes predicted a full return to pre-war throughput until late Q1 or early Q2 2027.
Goldman Sachs raised its Brent and WTI price forecasts by $5 to $85 and $80, respectively, for December 2026 and to $80 and $75, respectively, for 2027, reflecting its assumption that Middle East shipping disruptions will continue into 2027. Meanwhile, global diesel supply will remain tight due to a lack of spare refining capacity, Russia's ban on exports, and peak winter demand.