Key Highlights

  • Brent rose toward $112 a barrel on Thursday, within about $2.50 of the four-year high of $114.44 set on May 4.
  • The US ordered non-emergency staff and families to leave Saudi Arabia after Houthi attacks, including on Shaybah and Dammam airport.
  • Reports say US and Israeli planners have drawn up a short, intensive operation against Iran for after the Nov. 3 midterms.
  • Crude flows through Hormuz are near pre-war levels, but refined-product shipments remain constrained.

Brent crude rose toward $112 a barrel on Thursday, closing in on the four-year high of $114.44 reached on May 4, as traders priced in the risk that the war in the Middle East is about to widen.

The benchmark has climbed about 3% at its peak on the day, according to market reports, while U.S. West Texas Intermediate traded near $100. Three developments drove the move: a fresh wave of attacks on Saudi Arabia, a U.S. order for diplomats to leave the kingdom, and reports that Washington and Israel are preparing new strikes on Iran once the U.S. midterm elections are over.

Saudi Arabia Under Fire

The State Department ordered non-emergency government employees and their families to leave Saudi Arabia, citing a rise in attacks by Iran-aligned Houthi forces, spokesman Tommy Pigott said. The order followed a Wednesday strike on King Fahd International Airport in Dammam that killed one person and wounded eight, and a drone incident at Saudi Aramco’s Shaybah oilfield that killed two people.

The details matter for oil. Saudi air defenses intercepted the drone near a processing plant at Shaybah, and the deaths resulted from falling debris, according to Saudi reports. The Energy Ministry said field operations were not affected. Shaybah has capacity of about 1 million barrels a day, Bloomberg reported, and produces high-value crude, so repeated attacks would carry a real supply risk. Reports describe Shaybah as the fourth hit on Saudi territory or infrastructure in under two weeks.

Saudi Arabia has become a key bypass for Gulf exports during the conflict, which began with U.S. and Israeli strikes on Iran on Feb. 28. Its East-West pipeline and Red Sea terminal carry crude around the Strait of Hormuz, which is why attacks inside the kingdom unsettle traders more than their physical impact might suggest.

Post-Midterm Plans

The New York Times reported that U.S. and Israeli military planners have drawn up plans for a short, intensive operation against Iran after the Nov. 3 elections. President Donald Trump has not approved them, and has said this month there would be no attack on Iran before the midterms, according to reports. The planned targets are said to include energy infrastructure, nuclear facilities and missile and drone stocks.

An Iranian warning that it could target undersea cables beneath the Strait of Hormuz if Saudi infrastructure is attacked has added to the unease, according to commentary on the conflict.

Flows Recover, but Risks Remain

The physical picture is more mixed than the headlines. Crude exports through the Strait of Hormuz have increased toward pre-conflict levels, with some tankers reportedly switching off their tracking systems to avoid detection, according to Kpler. Shipments of refined oil products remain constrained, which keeps concerns about global energy supplies alive.

Kpler data show at least 18 attacks on shipping over the past two weeks. LSEG analysts warned that Iran is targeting tankers well beyond Hormuz, reaching into the Gulf of Oman and jeopardizing Gulf crude loadings and ship-to-ship transfers.

Why It Matters Beyond Oil

Oil above $110 is feeding directly into inflation. The Federal Reserve raised interest rates in September for the first time since 2023, and traders still price roughly a 90% chance of another increase in December, according to CME’s FedWatch tool. The 10-year Treasury yield has hovered near 5.1%, up from about 3.97% before the conflict began, according to the Associated Press. Mortgage rates have followed.

What to Watch

Traders will watch whether Saudi Arabia confirms who launched the Shaybah and Dammam attacks, whether the U.S. widens its evacuation orders to other missions in the region, and whether the pace of tanker attacks accelerates. A retest of the May 4 peak would put $114.44 in play. The risk premium could ease if shipments continue uninterrupted, analysts at ING have said, but there are few signs of that so far.

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