Oil prices on Tuesday surged toward $100 a barrel after Iran-backed Houthi militants launched an attack on Saudi Arabia that Saudi officials said injured dozens of civilians in a major escalation of tension in the region.
Analysts said the price reflected the market’s recognition that there is no end in sight for the conflict in the Middle East, which has disrupted oil flows through two vital arteries: the Strait of Hormuz and the Red Sea.
The price of Brent crude, the global benchmark for oil, rose above $99 a barrel during the day. That was the highest since late July, shortly after Houthi militants declared a maritime blockade on Saudi Arabia and began targeting Saudi tankers with missiles and drones.
The attack on Tuesday morning injured 73 civilians in the south of the kingdom, according to Saudi authorities, who vowed to take “all necessary measures and actions” to respond.
The Saudi energy ministry said in a statement that the latest attacks on energy facilities in the south of the country had caused fires at some locations, and temporarily disrupted operations. The ministry did not say who carried out those attacks.
“Oil market participants now pricing in a more prolonged disruption to shipping flows,” said Hamad Hussain, a senior economist with Capital Economics, a research firm. They and other analysts have raised oil price estimates, based on an expectation of increased disruptions.
Since the war began on Feb. 28 when the United States and Israel launched joint strikes on Iran, the global oil market has experienced a series of shocks. The Strait of Hormuz, once a vital waterway for 20 percent of the world’s oil, now handles only a fraction of its normal traffic as shippers face dangerous attacks. The Houthi attacks have disrupted efforts by Saudi Arabia, one of the world’s largest oil exporters, to transport its crude through the Red Sea.
Capital Economics, which even after a brief cease-fire between the United States and Iran ended predicted prices would fall this year, recently revised its assumptions. In a note last week, analysts said to expect prices around $100 a barrel for the rest of the year.
“With a swift resolution to the Hormuz crisis looking unlikely, our new working assumption is that energy flows from the Middle East only return to pre-war levels early next year,” analysts wrote.
Goldman Sachs issued an even more dire warning in a note, raising the prospect of $120 barrel per oil prices if shipping attacks in the Middle East intensify.
Vivian Nereim contributed reporting.
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