Brent crude holds near five-month high on Houthi attacks

Oil prices rose on Tuesday, with Brent crude hovering around a five-month high as traders priced in the risk from Houthi attacks on Saudi infrastructure and reports of attacks on vessels in the Gulf.

Brent crude futures climbed 55 cents, or 0.50 percent, to $110.10 a barrel, after touching $110.70 in the previous session, their highest since May 20, The Express Tribune reported, citing Reuters.

• WTI November: the US West Texas Intermediate contract, expiring on Tuesday, was up 0.24 percent at $103.91
• WTI December: the more active contract rose 39 cents, or 0.40 percent, to $98.93

Attacks keep the premium high

At least 18 vessels were reportedly attacked over two weeks, keeping the risk premium intact, shiptracker Kpler said in a note on Monday.

Yemen’s Houthis said on Monday they had launched several attacks on Saudi energy, airport and military targets, including an Aramco site in Yanbu, the Shaybah oilfield, Riyadh’s King Khalid International Airport and Abha airport. Saudi authorities did not immediately confirm the claims, and Reuters could not independently verify them.

Also on Monday, a Houthi attack on a training camp for government forces in Yemen’s Shabwa province killed 58 people.

“Oil prices remain well-supported … This suggests the market is pricing in a significant risk premium, given the situation’s volatility,” ING analysts said. “However, if flows continue uninhibited despite the geopolitical environment, the risk premium would likely erode slowly. Clearly, there are no signs of this yet.”

Russian supply in focus

President Donald Trump’s executive order on Friday waived key Russia-related US sanctions and tariffs, including penalties for buying Russian energy. Trump said on Saturday he had yet to announce a final decision, while Secretary of State Marco Rubio said officials wanted more time to evaluate the situation.

Russia’s crude output rose by 65,000 barrels per day in September to 8.43 million bpd, but remained about 870,000 bpd below a year earlier, the International Energy Agency said last week.

“While the prospect of additional Russian diesel supply offers some theoretical relief, traders appear far more focused on the ongoing risk of further damage to energy infrastructure across the Gulf region,” said Tim Waterer, chief analyst at KCM Trade.

PSX edges higher

In Karachi, the Pakistan Stock Exchange traded in positive territory, helped by buying in automobile assemblers, cement, commercial banks, oil and gas exploration companies and oil marketing companies, The Express Tribune reported.

• Opening: the KSE-100 index rose 312.38 points, or 0.19 percent, to 166,278.46
• Midday: at 12:28pm the index stood at 166,130.38, up 164.30 points, or 0.10 percent, after moving between gains and losses
• Volume: 81.49 million shares worth Rs4.34 billion had changed hands, against a previous close of 165,966.08 points

Rising international oil prices and geopolitical tensions kept investors focused on regional developments, the paper said.

Why it matters

For Pakistan, oil above $100 a barrel keeps pressure on fuel and power costs. The PSX’s cautious gains show investors are still buying energy stocks while watching the Gulf closely. Read our reports on last week’s oil rally and on the Houthi attack in Shabwa.

This article draws on reporting by The Express Tribune and Reuters.