Oil Prices Surge as Saudi Arabia's Red Sea Port Suspends Loadings

Oil prices surged nearly $3 on Tuesday after reports emerged that Saudi Arabia's Red Sea port of Yanbu has suspended oil loadings, and Libya halted operations at three oil fields.

This comes as Iran-backed Houthi forces in Yemen launched fresh attacks on Saudi Arabia on Monday, further intensifying supply concerns. The latest strikes followed a Houthi attack on Saudi Arabia's East-West Pipeline on Friday that forced the kingdom to shut the vital export route.

The National Oil Corporation (NOC) said operations at three oil fields in Libya were suspended after protesting members of the Petroleum Facilities Guard shut a valve on the Hamada-Zawiya crude export pipeline. The NOC warned it may declare force majeure if the valve remains closed or if additional fields are forced to halt production.

The attacks on energy infrastructure in Russia and Ukraine pushed U.S. diesel futures up more than 5.9%, putting them on track for a record close. Analysts say fresh attacks by the Houthis targeting Saudi Arabia may be influencing oil market investors' expectations about the severity and duration of the conflict, with some predicting Brent crude prices could rise above $120 per barrel.

Goldman Sachs said in a note that the recent attack may be more severe and could threaten the remaining 2 mb/d of recent Yanbu exports, which could take up to eight weeks to repair. The attacks on oil infrastructure have marked a meaningful escalation of the conflict and increased the probability of Brent rising above $120 a barrel.