Oil Prices Jump 3% as Houthi Attack Revives Supply Fears

Oil prices surged about 3% on Thursday, with Brent crude reaching a one-week high after a Houthi missile attack on Saudi Arabia renewed concerns over Middle East supply disruptions. Gains eased later as reports emerged that the United States and Iran were discussing a potential reopening of the Strait of Hormuz.

Brent crude futures climbed $3.52, or 3.4%, to settle at $106.60 a barrel, their highest close since September 15. U.S. West Texas Intermediate (WTI) crude gained $2.45, or 2.7%, to $94.61. Both benchmarks had risen roughly 5% at their session highs.

The rally followed Saudi Arabia's interception of six ballistic missiles launched by Yemen's Iran-backed Houthis. The Saudi-led coalition said the missiles targeted the southern province of Taif and the Yanbu area along the Red Sea, intensifying concerns about regional energy infrastructure.

Saudi Arabia has also increased crude pumping through its East-West Pipeline toward the Yanbu export hub, although tanker loadings have yet to resume, according to industry sources and shipping data.

Oil prices later retreated from their highs after reports that U.S. and Iranian negotiators in New York were exploring a phased agreement to ease their nearly seven-month conflict. The proposed framework could involve Iran reopening the Strait of Hormuz in exchange for Washington easing its economic blockade.

The Strait of Hormuz remains crucial to global oil flows and has become a key bargaining point in negotiations between Washington and Tehran.

Energy markets are also grappling with tight diesel supplies. Russian diesel exports have been disrupted following Ukrainian attacks on refineries and energy infrastructure, while Middle East tensions have added further pressure.

U.S. Energy Secretary Chris Wright has reportedly contacted major American refiners about potentially restricting diesel exports voluntarily. The discussions came amid reports that Washington was considering a 90-day export ban as diesel prices remain elevated, although Wright has disputed that such a ban is being prepared.

Analysts have warned that restricting U.S. diesel exports could tighten global fuel supplies further rather than significantly reducing domestic energy prices.