Oil Prices Surge on Supply Disruption Fears and Middle East Tensions

Oil prices climbed on Wednesday, with Brent futures rising 0.92% to $101.51 per barrel and US West Texas Intermediate (WTI) crude increasing 1.01% to $90.30. The gains were driven by concerns over potential supply disruptions from a storm heading towards US oil-producing regions and escalating tensions in the Middle East due to attacks by Yemen's Iran-backed Houthis on Saudi Arabia.

US forecasters warned that a developing storm in the Gulf of Mexico could become the first Atlantic hurricane of 2026 within two days, potentially impacting 15% of US crude oil output and 5% of natural gas production. Meanwhile, Saudi Energy Minister Prince Abdulaziz bin Salman reported that oil supplies have been increasing, with the East-West pipeline reaching 5.8 million barrels a day and significant shipments of crude oil and refined products leaving the Middle East.

Tensions in the region intensified as Saudi Arabia's airports in Jazan and Najran were targeted in attacks by the Houthis. The escalating conflict has raised concerns about further supply disruptions and higher oil prices. US President Donald Trump commented on the uncertainty in Iran's leadership, stating that nobody knows who is running the country during the ongoing US-Israeli war with Iran.

Analysts from JPMorgan and Goldman Sachs highlighted the uncertainty surrounding the conflict and its potential impact on oil prices. Goldman Sachs outlined a scenario where oil prices could surge to $120 per barrel if attacks on vessels in the Middle East intensify, while a return to normal exports could push prices back towards $80 per barrel. The risk of supply shocks in gas and fuels remains a key driver of oil prices, according to Daan Struyven, co-head of global commodities research at Goldman Sachs.