Key Highlights
- Brent crude surged up to 5% during Thursday trading before moderating, finishing around $105-106 per barrel
- Yemen’s Houthi forces launched six ballistic missiles intercepted by Saudi defenses, targeting Taif and Yanbu areas
- Reports indicate U.S. and Iranian officials are discussing a gradual agreement to restore access to the Strait of Hormuz
- The kingdom brought its East-West pipeline back online following previous disruptions that affected Yanbu crude deliveries
- American crude stockpiles increased by 3 million barrels in the latest week, contrary to market forecasts of a decline
Oil prices experienced significant volatility throughout the week as Middle Eastern security incidents and ongoing U.S.-Iranian diplomatic efforts created conflicting market pressures.
During Thursday’s trading session, Brent crude surged by as much as 5%. By Friday morning, the benchmark had stabilized in the $105 to $106 per barrel range.
The U.S. benchmark West Texas Intermediate mirrored this trajectory. After Thursday’s substantial gains, it was changing hands between $92 and $94 per barrel.
The price action followed an announcement from Saudi Arabia’s military coalition that it successfully intercepted six ballistic missiles launched by Yemen’s Houthi militants, who receive backing from Iran. The projectiles targeted locations including Taif and the Yanbu region along the Red Sea coast.
According to Houthi military spokesman Yahya Saree, the organization deployed dozens of missiles and unmanned aircraft in what he described as an extensive assault on Saudi military installations in the Jazan area.
Saudi Civil Defense authorities additionally issued an urgent alert for Mecca. The warning instructed residents to comply with official guidance regarding a possible threat in the vicinity.
Yanbu’s Strategic Importance for Petroleum Flows
The Red Sea port of Yanbu serves as a crucial export terminal linked to the kingdom’s eastern petroleum production zones. Operations at the facility had already experienced disruption from previous attacks on Saudi Arabia’s East-West pipeline infrastructure.
The kingdom has been ramping up crude deliveries directed toward Yanbu. Nevertheless, vessel loading operations at the terminal had not completely normalized as of the latest reports.
U.S. Secretary of State Marco Rubio confirmed earlier this week that the Saudi East-West pipeline had resumed operations. This transportation corridor provides an alternative route that circumvents the Strait of Hormuz chokepoint.
Rubio further indicated that the Strait of Hormuz continues to operate. He noted that daily petroleum volumes transiting the waterway were increasing.
Washington and Tehran Consider Gradual Resolution Framework
Thursday’s price gains diminished somewhat following emerging reports that American and Iranian representatives meeting in New York are examining a stepwise approach to resolving the ongoing standoff.
The proposed framework would see Iran restore access through the Strait of Hormuz, while the United States would dismantle its economic restrictions on the Islamic Republic.
Iranian President Masoud Pezeshkian expressed Tehran’s willingness to engage in talks aimed at ending hostilities. However, he emphasized that Iran would maintain its nuclear program and reject what he characterized as American coercion.
A senior adviser to Iran’s Supreme Leader warned that Tehran could extend the confrontation into the Indian Ocean region should the U.S. or Israel initiate additional military action.
U.S. Central Command disclosed that it had rerouted 115 commercial ships as of Wednesday. This action formed part of its enforcement measures related to the naval restrictions imposed on Iran.
According to Reuters reporting, merely 17 commodity-carrying vessels navigated through the Strait of Hormuz during one recent weekend period. This stands in stark contrast to the pre-conflict average of approximately 125 daily vessel transits.
Regarding supply developments, American commercial crude inventories expanded by 3 million barrels during the week ending September 18. Market analysts had anticipated a withdrawal of 641,000 barrels instead.
Gasoline stockpiles decreased by 1.7 million barrels over the identical period. Distillate reserves contracted by 400,000 barrels.
Diesel costs across the United States also reached unprecedented highs this week. The Trump administration is examining options to enhance domestic diesel availability.
Energy Secretary Chris Wright has reportedly engaged with leadership at prominent refining companies regarding voluntary limitations on diesel exports.
Earlier Reuters coverage indicated discussions concerning a potential 90-day prohibition on diesel exports. White House officials have disputed that any such ban is under consideration.
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