Oil eases after Houthi strikes on Saudi spark rally

Oil prices pulled back on Tuesday, a day after a rally that took Brent crude above \$106 a barrel. Traders spent the session weighing more attacks on Saudi Arabia and on shipping in the Strait of Hormuz against Middle East exports that have kept recovering. Brent futures closed Monday's session above \$106 and then eased in Tuesday trading.tradingview+2

The swings reflect a pattern that has held for weeks. Each new attack pushes prices up, and each report of steady exports brings them back down. With the U.S.-Iran war in its eighth month, neither side of that trade has taken control.

Monday's rally

Barchart reported that crude settled sharply higher on Monday after Iran-backed Houthi rebels in Yemen launched drone and missile attacks on Saudi Arabia over the weekend. The attacks raised the risk of an escalation that could pull the U.S. further into the conflict. Drone and missile attacks on vessels in the Strait of Hormuz have also increased. Iran said ships using "unauthorized" routes would be pursued throughout the region and "punished," not only inside the strait. The cost of shipping oil from the Middle East to China rose to a record \$1.4 million a day last week.tradingview

The gains came despite a dollar index at a 1.5-year high and news that Russia would partially lift its diesel export ban. That decision follows an agreement between President Vladimir Putin and President Donald Trump. Iranian President Masoud Pezeshkian has said Iran will not allow freedom of navigation through Hormuz while sanctions and the U.S. blockade remain in place.tradingview

Barrels keep moving

Supply data has worked against the rally. Reuters reported that Gulf oil flows excluding Iran rose to more than 81% of pre-war levels in September, led by a recovery in Saudi exports. Iranian exports fell to zero under the U.S. blockade. "Shipping data shows regional crude exports actually exceeded pre-war levels on several days in late September," said Priyanka Sachdeva of Phillip Nova. Shell ↗ 1.38% has said flows out of Hormuz are back to about 80% of pre-war levels. Bloomberg tracking data shows Saudi crude exports reached 5.28 million barrels per day in September, the highest in seven months.thedailystar+1

Two other moves added to the supply. Earlier this month, G7 countries agreed to release 100 million barrels of diesel and crude from emergency reserves after pressure from Trump. Saudi Aramco also cut its November price for Arab Light crude sold to Asia.tradingview+1

Risks persist

Saudi Arabia has moved most of its exports to the Red Sea since Hormuz was closed, but fighting with the Houthis has disrupted that route as well. ING analysts called the situation "a clear tug-of-war" between improving supply and lingering threats. The International Energy Agency has raised its estimate of this year's global oil deficit to 1.7 million barrels per day. It now expects a global surplus to return only in 2027.investing+1

Sachdeva said that while barrels are still moving, "the cost, insurance, routing, and security risks of moving them remain elevated".thedailystar