Oil prices climbed on Friday as concerns over supply disruptions in the Middle East intensified following Houthi attacks in Saudi Arabia. Brent crude futures rose by 58 cents, or 0.5%, to $113.75 a barrel, while US West Texas Intermediate crude futures increased by 66 cents, or 0.7%, to $100.13. Brent crude is on track to close higher for a third consecutive week, while WTI is set to finish lower after two weeks of gains.
Saudi Aramco evacuated its headquarters in Dhahran on Thursday as fighting escalated between the world's largest crude exporter and the Yemen-based Houthis. Analysts at ING noted that markets are increasingly worried about renewed escalation in the Persian Gulf, which could threaten oil flows. They warned that even the possibility of re-escalation is likely to keep a geopolitical risk premium embedded in prices.
Clashes between the Houthis and a Saudi-led coalition have continued since the Iran-aligned group pushed towards Bab el-Mandeb, a critical shipping chokepoint at the mouth of the Red Sea. Linh Tran, an analyst at XS.com, emphasized the importance of monitoring the extent of actual disruption and the time needed to restore operations, as these factors will determine the supply risk premium the market is willing to pay.
In Libya, an oil pipeline valve from the Hamada and Tahara oilfields to Zawiya port was shut, leading to a reduction in production at both fields. The head of the National Oil Corporation confirmed this development to Reuters on Thursday.