Oil Continues to Rise Amid Escalating Regional Tensions

The price of a barrel of Kuwaiti crude rose by $7.32 to reach $94.71 per barrel in yesterday’s trading, compared to $87.39 on Tuesday, according to the price announced by the Kuwait Petroleum Corporation.

In global markets, oil prices continued their rise on Thursday for a fifth consecutive day, reaching their highest levels in over a month after the Houthi rebels in Yemen announced they had targeted two Saudi oil tankers, raising fears that disruptions to global oil supplies could expand beyond the Strait of Hormuz. Brent crude futures rose $4.52, or 4.80 percent, to $98.59 per barrel, marking the highest level since June 3. U.S. West Texas Intermediate (WTI) crude rose $3.39, or 3.9 percent, to $90.22 per barrel, after touching its highest level since June 11.

Ahmed Al-Asiri, research expert at PwC, said: “The outlook for immediate crude oil transactions remains positive, as markets are pricing in a concerning probability of supply disruptions through another strait.”

Shipping data showed that two large Chinese tankers carrying 4 million barrels of Saudi oil headed toward the Bab al-Mandab Strait on Thursday to exit the Red Sea, despite a Saudi tanker being attacked in the region.

U.S. investment bank Goldman Sachs stated that oil prices face new risks following the announcement by Yemen’s Houthi group that it targeted oil tankers in the Red Sea, alongside a renewed decline in Kazakhstan’s oil exports.

While the bank’s analysts, including Dan Strain, maintained their forecasts for the benchmark global Brent crude price at around $80 per barrel in the fourth quarter of this year, based on the assumption that the military confrontation between the United States and Iran would end, they warned of potential price increases if developments unfolded in certain ways.

The analysts noted that under a “price rise scenario,” Brent crude could exceed $120 per barrel in the fourth quarter of this year if the Strait of Hormuz in the Gulf remains closed, through which approximately one-fifth of global energy supplies normally pass.

At the same time, the analysts said that if navigation disruptions continue in the Strait of Hormuz, Bab al-Mandab, and the Suez Canal through 2027, “we expect an additional price increase of $25 compared to our expected price rise scenario.”

Bloomberg News reported that the average oil flow through the Bab al-Mandab Strait reached about 9 million barrels per day last month, of which approximately 4 million would be difficult to reroute through alternative paths if disruptions spread from the Strait of Hormuz to Bab al-Mandab and the Suez Canal.

Goldman Sachs experts said they expect oil prices to retain their current gains during the current and next months, amid continued declines in global commercial stockpiles, particularly in OECD countries.

Buyers, traders, and energy sector officials told Reuters that Asian and European buyers of liquefied natural gas (LNG) intend to demand price reductions and obtain additional supply guarantees from Qatar and the UAE, as insurance costs for these shipments have risen due to the war between the United States and Iran.

The war has reshaped the global energy sector, undermining the reputation of Gulf producers as the world’s most reliable suppliers—a reputation that had previously granted them significant negotiating power. It has also reduced their ability to impose commercial terms, as the war has halted most oil and gas flows through the Strait of Hormuz.

Qatar’s massive reserves have helped cement the country’s position as a dominant force in the global gas market. Alongside its neighbor the UAE, where production volumes are rising, Qatar accounts for roughly one-fifth of global liquefied natural gas (LNG) export capacity, with all of these volumes relying on passage through the Strait of Hormuz to reach global markets. Qatari LNG is among the least costly and most price-competitive globally, thanks to low production costs, while the UAE offers more flexible contractual terms. However, buyers say that rising risks and higher insurance costs will give them leverage in future negotiations to push for lower prices and demand greater flexibility.