Oil Prices Surge Amid Growing Supply Disruption Risk from the Region

SadaNews Economy - Oil prices surged after a Saudi oil tanker was targeted in the Red Sea, threatening to escalate the war between the United States and Iran, leading to deeper supply disruptions.

Brent crude rose by as much as 2.5% to exceed $96 a barrel, the highest level since early June, after closing at a six-week high in the previous session. West Texas Intermediate crude increased by up to 1.3% to trade near $88 a barrel.

The UK Marine Trade Operations authority stated that a vessel was hit southwest of the Saudi city of Al-Shuqaiq, causing a fire on board. The authority did not disclose the identity of the vessel.

In a related context, the Saudi Press Agency reported on Thursday, citing a source from the General Transport Authority, that the Saudi-owned vessel "Insilia" was targeted while sailing in the Red Sea, leading to a fire at the front of the ship.

The source noted that all crew members are safe and that authorities have taken the necessary measures to secure the vessel and its crew and protect the marine environment, adding that these attacks are considered "a violation of international laws and norms that ensure the safety of commercial vessels and their crews."

Saudi Arabia condemned the threats from the Houthi group in Yemen to navigation, pledging to protect the kingdom's vessels and continue supporting the Yemeni people, while the "Coalition to Support Legitimacy in Yemen" confirmed that it would respond firmly and powerfully to Houthi threats against passing vessels.

The confirmation of these attacks on tankers in the Red Sea could heighten tensions in the conflict that has disrupted traffic through the Strait of Hormuz. The Red Sea has become a major alternative export route that Saudi Arabia increasingly relies on to bypass the Strait of Hormuz. Shipments from the kingdom's ports on the Red Sea have reached record levels in recent days and weeks.

These developments come as the United States continued to carry out strikes on Iran for the twelfth consecutive night, with the U.S. Central Command stating in a statement that "the mission will continue to further undermine Iran's ability to threaten civilian mariners and commercial vessels transiting through regional waters."

Both the United States and Iran downplayed the likelihood of peace talks, increasing the odds of continued hostilities that could put more pressure on oil markets. President Donald Trump threatened to bomb bridges and power plants and reiterated his threats of an attack on "Peak Axe Mountain," a site suspected of being a secret nuclear facility.

Oil prices had jumped nearly 30% this month amid mutual Iranian and American attacks, with Iran targeting several vessels in the Strait of Hormuz in an attempt to assert control over the passage that transported about one-fifth of global energy supplies before the war.

Despite the recent rise, benchmark crude prices remain below their highest recorded levels during the war, when Brent prices hit $126 a barrel, indicating that markets currently do not expect a return to full-scale war.