Brent hits US$117 as Houthi attacks disrupt Saudi shipments

Brent crude has surged to US$117 per barrel as intensifying Houthi attacks on Saudi infrastructure and reduced flows through the Strait of Hormuz have tightened oil supplies and increased transportation costs.

Freight rates for Saudi crude shipments to Asia have doubled since early September, adding pressure to delivered oil prices and squeezing Saudi Aramco’s export margins, according to Rystad Energy Chief Economist Claudio Galimberti.

Shipping costs on the Yanbu-Ningbo route, via the Suez Canal and around the Cape of Good Hope, rose from US$24 per barrel in early September to US$48 on October 22.

Houthi attacks

The increase has been attributed to heightened security risks in the Red Sea and limited tanker availability from the Persian Gulf, forcing Saudi cargoes onto longer and more expensive routes.

The Houthis have claimed attacks on a Saudi Aramco site in Yanbu, the Defence Ministry in Riyadh and airports in Abha and Dammam. A drone targeting the Shaybah oil field on October 21 killed at least two contract workers, although Saudi authorities reported that operations were unaffected.

Meanwhile, Washington has pursued diplomatic and industrial measures to ease the US diesel crisis. The suspension of sanctions on Russia could facilitate peace negotiations and potentially increase Russian energy supplies, while the Defence Production Act is intended to expand domestic refining capacity.

However, neither measure is expected to provide substantial immediate relief, with US diesel prices exceeding US$6 per gallon and energy affordability emerging as a political concern ahead of November’s midterm elections.

Energy costs

Higher energy costs have also complicated the global inflation outlook, despite resilient US employment and business activity and tentative signs of stabilisation in China.

The Federal Reserve, European Central Bank and Bank of Japan are expected to maintain interest rates this week, although further tightening is anticipated in December. The effectiveness of higher borrowing costs in addressing supply-driven inflation remains uncertain.

Financial markets are also facing pressure from concerns over artificial intelligence investment returns, while France’s widening sovereign bond spread has highlighted broader fiscal risks.

Upcoming economic data, central bank decisions and corporate earnings are expected to provide further indications of whether global growth can withstand prolonged energy disruptions and persistent inflation.

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