US-Iran tensions keep oil markets on edge
Market sentiment has been shaped by uncertainty over Washington’s next steps towards Tehran. US President Donald Trump said on Wednesday that Washington was not negotiating with Iran and that something would happen “fairly soon”.
The comments came as US officials told The New York Times that the US and Israel had plans for fresh strikes on Iran after the US midterm elections, according to the report.
Iran’s army chief, meanwhile, said the country’s military was fully prepared for “asymmetric warfare” after strengthening its capabilities, state media agency Tasnim reported.
The prospect of renewed hostilities has raised concerns that oil production, export infrastructure or shipping routes could be affected, adding a geopolitical risk premium to crude prices.
Houthi attacks raise concerns over oil supply routes
Attacks by Houthis have added to concerns about regional security. Saudi Arabia reported a drone attack targeting the Shaybah oil field in its Eastern Region on Wednesday, which left two people dead and two injured, according to Saudi state media.
An attack at King Fahd International Airport in Dammam also reportedly killed two people and injured eight. Reuters reported that Saudi Aramco had instructed staff to evacuate its Dhahran headquarters and work remotely following the attacks.
The developments have drawn attention to the Bab el-Mandeb Strait, a strategic maritime passage connecting the Red Sea and the Gulf of Aden. Any disruption could delay oil shipments, force vessels to take longer routes and raise freight costs.
UBS analyst Giovanni Staunovo warned that further escalation could cause additional supply disruptions. Analysts say the duration and scale of any interruption will be crucial in determining how long prices remain elevated.
Other supply concerns add to market uncertainty
Oil markets are also tracking developments beyond the West Asia. Authorities in the United Arab Emirates reported an oil spill off the coast of Umm Al Quwain, although its cause and the vessel involved had not been established in the information available.
In Libya, production at the Hamada and Tahara oil fields was reduced following the closure of a valve on a pipeline connecting the fields to the port of Zawiya, Reuters reported, citing an official from the National Oil Corporation. The extent and duration of the disruption remained unclear.
Meanwhile, LSEG data showed a Malta-flagged vessel carrying 40,000 metric tonnes of Russian diesel to New York.
With geopolitical risks, shipping costs and production disruptions all in focus, traders will continue to watch developments in the West Asia and the security of major oil supply routes for cues on crude prices.
(With Reuters inputs)