Oil Jumps 2% as Saudi Attacks and Hormuz Tanker Strikes Outweigh Russian Diesel Supply
Brent climbed back above $106 and WTI to $93.78 as weekend strikes on Saudi Arabia and two tankers near the Strait of Hormuz put Gulf supply risk back at the centre of the market, offsetting fresh Russian diesel volumes and a Gulf of Mexico output recovery after Hurricane Isaias.
Oil prices climbed to their highest levels in nearly two weeks on Monday morning as fresh attacks on Saudi Arabia and on tankers near the Strait of Hormuz put Middle East supply risks back at the centre of the market. West Texas Intermediate was trading at $93.78 a barrel, up $1.93 or 2.10%, while Brent crude rose $2.09, or 2.00%, to $106.80 a barrel. The renewed buying followed a weekend of attacks, including a Houthi strike on Riyadh's international airport on Saturday that killed 13 people and wounded more than 300, further attacks reported on Sunday, and two tankers struck near Oman and in the Strait of Hormuz.
The tanker attacks threaten to interrupt the recovery in Gulf oil exports, which reached 81% of prewar levels in September. Crude and condensate shipments had recovered to 91%, but refined-product exports remained at just 60% of prewar volumes. In the US Gulf of Mexico, Shell, Chevron and BP were preparing to restore offshore production after Hurricane Isaias disrupted operations over the weekend, which should return barrels to a still-tight Atlantic Basin balance.
Additional Russian barrels offered some offset. President Donald Trump said on Friday that Russia would immediately supply more than 300,000 metric tons, or roughly 2.25 million barrels, of diesel to US and global markets, with more to follow, and Moscow also partially lifted restrictions on diesel exports, allowing another 500,000 tons, about 3.7 million barrels, onto the international market. Trump announced on Sunday that Russia and Ukraine had agreed to stop attacking each other's energy infrastructure, although Ukraine's President Volodymyr Zelensky accused Russia of violating the agreement on Monday.
On demand, OPEC Secretary General Haitham Al Ghais said on Monday that the group now expects global oil demand to grow by just 400,000 barrels per day in 2026, down from the 1.4 million bpd it forecast at the start of the year, with much of the deferred demand expected to return in 2027. The group had already cut its 2026 estimate to 380,000 bpd in September, so the latest figure is a slight month-on-month increase even though it is roughly 1 million bpd below January's outlook. Goldman Sachs raised its December Brent forecast to $90 a barrel from $85, estimating that geopolitical risk is currently adding just over $20 a barrel to prices.
Freight and insurance costs are reinforcing the prompt premium. Insurance for ships carrying oil across the Black Sea has surged from about $200,000 to $2.5 million per vessel in recent months, a 12.5-fold increase equivalent to an extra $2.3 million a voyage, according to Evgeni Simeonov, Lukoil's special commercial manager in Bulgaria. London's marine insurance market widened its Black Sea high-risk reporting requirements in September to cover the entire basin, with war-risk premiums adding hundreds of thousands of dollars to seven-day voyages, and benchmark daily tanker earnings on the Novorossiysk-to-Augusta route had already reached a record $440,948 in August, up 140% since early July.