Oil prices rise following attacks on Saudi energy facilities

Global oil prices reached five-month highs this week, with Brent crude surpassing $111 per barrel on Thursday, driven by renewed geopolitical tensions in the Middle East. The escalation follows lethal drone attacks claimed by Houthi forces on Saudi Aramco's Shaybah oil field, which resulted in two fatalities, and a separate attack on King Fahd International Airport in Dammam that killed one person. In response to the worsening security situation, the United States has ordered the partial evacuation of diplomatic staff and their families from Saudi Arabia.

While exports through the Strait of Hormuz have reportedly recovered to approximately 80% of pre-war levels, market uncertainty persists. Concurrently, energy dynamics are shifting as the U.S. looks to increase imports of heavy crude from Venezuela for refining in India, and Russia prepares to deliver its first shipment of diesel to the U.S. following a partial lift of sanctions. Meanwhile, Ukraine continues to target Russian energy infrastructure with drone strikes in an attempt to disrupt these diesel exports. Analysts warn that sustained high energy prices may increase long-term inflation expectations and pressure central bank interest rates.