Oil dropped as traders assessed Middle East supply risks, with the US pausing strikes against Iran over the weekend, while the Houthis claimed attacks against targets in Saudi Arabia.
Brent fell about 6 per cent toward US$91 a barrel, after ending lower on July 24, while West Texas Intermediate was below US$84. European natural gas sank as much as 7.8 per cent.
After striking the Islamic Republic for 13 days, the US has held off since late on July 24, raising questions over US President Donald Trump’s next move. Iran’s army said that Tehran had suspended its responses.
Still, Tehran-backed Houthis in Yemen said they had struck facilities linked to Saudi Aramco in the Red Sea port towns of Jizan and Yanbu on July 25, though neither Riyadh nor Aramco immediately confirmed the claim.
Brent has surged by about 30 per cent in July, briefly topping US$100 a barrel last week, as the US-Iran conflict spread beyond the Strait of Hormuz to the Red Sea. The conflict – now nearing the end of its fifth month – has stoked concerns of a global inflationary shock as stockpiles sink and product prices jump.
At the weekend, Saudi authorities issued emergency warnings for two provinces, before lifting them shortly afterward. Yanbu, the western terminus of Saudi Arabia’s East-West pipeline, has become the kingdom’s key crude export outlet, handling millions of barrels a day since the Strait of Hormuz became effectively shut. Jizan is home to an Aramco refinery and export terminal. BLOOMBERG
