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Morning Oil Outlook: Houthi Strikes Push Brent to a Five-Month High

Jeff Showalter

— 2 min read
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Morning Oil Outlook: Houthi Strikes Push Brent to a Five-Month High
Photo by Anthony Rosa / Unsplash

Brent crude pushed above $111 a barrel Tuesday morning, its highest level since May, after Yemen’s Houthis claimed a fresh round of strikes on Saudi Arabia. Traders are paying up for risk again. They’re betting the attacks on Saudi sites and Gulf shipping won’t stop soon.

Overnight

Brent slipped Monday, settling down 31 cents at $109.55 as some traders took profits. That pause didn’t last. The Iran-backed Houthis claimed six attacks on Saudi energy, airport and military targets Monday, including King Khalid International Airport in Riyadh.

Saudi authorities haven’t confirmed those claims. Ships are taking hits too, and shipping tracker Kpler counts at least 18 vessels reportedly attacked over two weeks. Early Tuesday, Iran’s Revolutionary Guard claimed mines struck two tankers, though no one has independently verified it.

Where Oil Stands

Both benchmarks are higher this morning. Here is where prices sat early Tuesday.

  • Brent: $111.30, up 1.52%
  • WTI (December contract): $100.80, up 2.30%
  • WTI (November contract, expiring today): settled Monday at $103.66, up $2.25
  • U.S. diesel, AAA national average: $6.32 a gallon, up from $6.28 a week ago and $3.62 a year ago

WTI, or West Texas Intermediate, is the U.S. benchmark. You’ll see two WTI prices today because the November contract expires, and most trading has already moved to December.

Here’s the odd part. Crude is still flowing. Energy Secretary Chris Wright told Fox News that Gulf crude flows have recovered to about 80% of prewar levels, though fuel shipments remain tight.

So the market is pricing the threat, not an actual shortage. Tehran isn’t helping. Iran’s First Vice President Mohammad Reza Aref said Iran has “no choice” but to assert control over the Strait of Hormuz and that “the US is now the cause of the current situation and must pay the price.”

What to Watch Today

The November WTI contract expires today. The American Petroleum Institute usually posts its weekly inventory estimate Tuesday afternoon, and the Energy Information Administration’s official report follows Wednesday morning. A preliminary Reuters poll expects U.S. crude and fuel stockpiles fell last week.

Washington is the other wild card. President Trump signed an order waiving some Russia-related sanctions and tariffs, but he said he hadn’t made a final decision, and Secretary of State Marco Rubio said officials want more time. Oil dipped early Monday after the order, making it one of the few stories pulling prices lower.

Then there’s the Fed. Analysts expect a second straight rate hike at next week’s meeting as energy costs feed inflation. “The risks to oil prices clearly lie to the upside,” said Hamad Hussain, commodities economist at Capital Economics.

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