Brent Oil Prices See Monthly Rise as Houthi Attacks Widen Gulf Conflict

March 31 ------ Oil prices extended gains with Brent heading for a record monthly rise, after Yemeni Houthis widened the Iran war by launching their first attacks on Israel.

Brent futures rose 66 cents or 0.6% to $113.23 a barrel at 1031 am ET (1431 GMT) after settling 4.2% higher on Friday. U.S. West Texas Intermediate futures were up $2.2 or 2.2%, at $101.83 after gaining 5.5% in the previous session. Brent has soared by about 58% this month, the steepest monthly jump in LSEG data going back to 1988, exceeding gains made during the 1990 Gulf War. U.S. crude, meanwhile, has climbed by 51% for its biggest monthly gain since May 2020.

The gains were driven by Iran’s effective closure of the Strait of Hormuz, a chokepoint for about a fifth of global oil and gas supplies. The conflict, which began on February 28 with U.S. and Israeli strikes on Iran, has since spread across the Middle East, stoking concerns over shipping routes around the Arabian Peninsula and the Red Sea.

Israel’s military said it intercepted two drones launched from Yemen on Monday, two days after Iran‑aligned Houthis fired missiles at Israel for the first time since the start of the U.S.-Israeli war on Iran. Iran-backed Lebanese group Hezbollah also fired rockets at Israel on Monday. The Houthis have yet to target shipping in the Red Sea, which handles about 15% of global maritime traffic. “If the Houthis were to attack shipping and shut the southern entrance to the Red Sea, it would likely be a $5 to $10 event,” said Robert Yawger, director of energy futures at Mizuho.

TRUMP ISSUES IRAN WARNING AGAIN

Adding to price pressures, U.S. President Donald Trump on Monday warned Iran to reopen the Strait of Hormuz or face U.S. attacks on its oil wells and power plants. “Great progress has been made, but if for any reason a deal is not shortly reached, which it probably will be, and if the Hormuz Strait is not immediately ‘Open for Business,’ we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island,” Trump wrote in a social media post. Previously, Trump said he would pause attacks on Iran's energy network until April 6.

As more U.S. troops arrived in the Middle East, Trump said earlier that the U.S. and Iran have been meeting "directly and indirectly" and Tehran's new leaders have been "very reasonable". Iran, however, described U.S. proposals to end a month of war in the Middle East as "unrealistic, illogical and excessive" on Monday and unleashed more missiles on Israel. The Israeli military said on Monday that it was attacking Iranian government infrastructure throughout Tehran. "Trump's extended deadline of April 6 – when the U.S. could potentially resume attacks on Iranian energy infrastructure – has had no reassuring effect. The market is now asking for concrete signs of de-escalation, not just rhetoric," SEB Research said in a note.

Separately, finance leaders from the Group of Seven countries said on Monday they stood ready to take "all necessary measures" to safeguard energy market stability and limit broader economic spillovers from recent volatility.

OIL DISRUPTIONS

Saudi crude exports redirected from the Strait of Hormuz to Yanbu port in the Red Sea reached 4.658 million barrels per day last week, data from analytics firm Kpler showed. That was a sharp increase from an average of 770,000 bpd in January and February.

If exports from Yanbu were disrupted, Saudi oil would need to pivot toward Egypt’s Suez-Mediterranean (SUMED) pipeline to the Mediterranean, JP Morgan analysts said. Attacks in the region escalated at the weekend and damaged Oman's Salalah terminal despite efforts to start ceasefire talks.

Separately, Vietnam's Binh Son Refining and Petrochemical said on Monday that it was in talks with Russian partners to buy crude oil. The company said it would also buy more crude from Africa, the U.S. and Southeast Asia.

Colombia's oil production fell 2.74% year-on-year in February compared to a year earlier, the country's ANH national hydrocarbon agency said on Monday.

Source: marinelink.com