Oil surges over $1 as Saudi strikes and Iran threat roil markets

The Saudi attacks expand the conflict into new regions beyond the Iran-US and Hormuz-centered clashes that had already lifted Brent roughly 8% and WTI nearly 10% last week, introducing an additional risk premium at the futures reopening. With Strait of Hormuz shipping already at its lowest point since May and US fuel stocks far below seasonal norms, the market lacks much spare capacity to cope with further supply interruptions, keeping the bias toward the upside. OPEC+ keeping output policy unchanged for October eliminates any near-term supply relief, making prices sensitive to headline risk from both the Red Sea and Gulf regions.

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The conflict's expansion into Saudi Arabia means oil's six-week rally now has another front to factor in.

Summary:

• Oil advanced over $1 when futures reopened after reports of blasts in southwestern Saudi Arabia
• According to Fars News Agency, Yemeni ballistic missiles hit Khamis Mushait and drones struck Abha airport in Asir province
• Oil had already risen to a six-week peak following Iran's pledge to strike Gulf energy infrastructure again if the US continues attacking its assets
• The US and Iran exchanged strikes on oil tankers and warships over the weekend, escalating the conflict that began in late February
• Shipping traffic through Hormuz has dropped to its lowest level since May, while US gasoline and distillate inventories remain well below seasonal norms
• OPEC+ made no change to its output policy for October, with new quotas still requiring agreement

Oil climbed over $1 when futures resumed trading following reports of blasts in southwest Saudi Arabia, adding fresh escalation to an already significantly elevated market. Fars News Agency said Yemeni ballistic missiles hit Khamis Mushait and drones targeted Abha airport in Asir province, expanding the conflict into Saudi territory for the first time in this current phase of hostilities.

The advance follows a rally that had already pushed oil to a six-week peak, spurred by Iran's threat to hit energy infrastructure across the Middle East if the US attacks its assets further. On Monday, Iranian Parliament Speaker Mohammad Baqer Qalibaf warned that any attack on Iranian assets would be retaliated in kind, after the US and Iran exchanged strikes on oil tankers and warships over the weekend, markedly escalating the conflict that started in late February. Maritime intelligence firm Marisks said commercial tankers are increasingly employed as instruments of economic pressure, blurring the distinction between military and commercial vessels.

Brent rose roughly 8% last week and WTI nearly 10%, as the conflict keeps eating into global supply and increasing dependence on inventories. Hormuz shipping traffic has fallen to its lowest point since May, while US gasoline and distillate stocks stay well below both year-ago levels and five-year seasonal averages. Iran is anticipated to declare a restricted zone beyond the Strait of Hormuz in the coming days. OPEC+ kept its output policy unchanged for October, stating that new quotas must still be agreed upon before further actions are taken.