Crude Markets Fluctuate Amid Yemen Strikes and U.S.-Iran Diplomacy

Key Highlights

• Brent crude surged as high as 5% on Thursday before retreating, eventually settling around the $105-106 per barrel range
• Yemen’s Houthi forces launched six ballistic missiles at Saudi targets including Taif and Yanbu, all intercepted by coalition defenses
• Diplomatic channels between Washington and Tehran are discussing a gradual agreement to restore passage through the Strait of Hormuz
• The kingdom brought its East-West pipeline back online following previous attacks that halted crude deliveries to Yanbu
• American crude stockpiles increased by 3 million barrels in the latest week, defying forecasts for a decline

Crude oil prices experienced dramatic volatility this week as regional military strikes in the Middle East collided with emerging diplomatic efforts between Washington and Tehran.

Brent crude rallied by up to 5% during Thursday trading before moderating to settle in the $105-$106 per barrel zone by Friday morning.

Brent Crude Oil Last Day Financial Futures (BZ=F)

West Texas Intermediate followed comparable movements, hovering between $92 and $94 per barrel after Thursday’s substantial gains.

The volatility emerged following confirmation from Saudi Arabia’s defense coalition that it successfully intercepted six ballistic missiles launched by Yemen’s Houthi fighters, who maintain ties with Iran. The projectiles targeted locations including Taif and the Yanbu coastal zone along the Red Sea.

Yahya Saree, the Houthi military spokesperson, claimed the organization deployed numerous missiles and unmanned aerial vehicles in what he described as an extensive offensive targeting Saudi military installations in the Jazan region.

Saudi Civil Defense authorities additionally issued urgent alerts in Mecca, instructing citizens to comply with official guidance amid potential threats to the vicinity.

Yanbu’s Strategic Importance for Crude Exports

Yanbu serves as a critical Red Sea shipping terminal linked to the kingdom’s petroleum fields in the east. Operations at the facility were already compromised by previous damage sustained by Saudi Arabia’s East-West pipeline infrastructure.

The kingdom has been ramping up crude production directed toward Yanbu. Nevertheless, tanker departures from the terminal had not completely normalized at the time of this report.

U.S. Secretary of State Marco Rubio confirmed earlier this week that Saudi Arabia successfully restored operations on its East-West pipeline. This critical route enables crude to circumvent the Strait of Hormuz chokepoint.

Rubio further stated that the Strait of Hormuz continues to operate, with increasing volumes of petroleum transiting the waterway daily.

Washington and Tehran Consider Gradual Agreement

Thursday’s price gains moderated following emerging reports that American and Iranian representatives meeting in New York are discussing a staged approach to de-escalation.

The proposed framework would involve Iran restoring access through the Strait of Hormuz while the United States would dismantle its economic sanctions regime targeting the Islamic Republic.

Iranian President Masoud Pezeshkian indicated Tehran’s willingness to engage in dialogue aimed at resolving tensions. He emphasized, however, that Iran would maintain its nuclear capabilities and reject what he characterized as American coercion.

A senior aide to Iran’s Supreme Leader warned that Tehran could extend operations into the Indian Ocean should Washington or Israel initiate additional strikes.

U.S. Central Command confirmed it had rerouted 115 commercial ships as of Wednesday as part of its enforcement measures implementing the naval blockade against Iran.

Reuters documented that merely 17 commodity carriers traversed the Strait of Hormuz during one recent weekend period. This represents a dramatic decline from the pre-conflict baseline of approximately 125 vessels daily.

Regarding supply fundamentals, American commercial crude reserves expanded by 3 million barrels during the week ending September 18. Market analysts had anticipated a reduction of 641,000 barrels.

Gasoline stocks decreased by 1.7 million barrels over the identical period. Distillate reserves dropped by 400,000 barrels.

Diesel pricing in the United States reached unprecedented levels this week. The Trump administration is evaluating measures to enhance domestic diesel availability.

Energy Secretary Chris Wright has reportedly initiated conversations with leadership at prominent refineries regarding voluntary limitations on diesel shipments abroad.

Reuters previously disclosed discussions about a potential 90-day prohibition on diesel exports. White House officials have refuted claims that any such ban is under consideration.

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