Oil tops $110 as US orders diplomats out of Saudi Arabia

The latest:

Brent crude climbed past $110 a barrel on Thursday after the United States ordered some diplomats and their family members to leave its missions in Saudi Arabia, following a wave of Houthi attacks on the kingdom. US officials told Reuters the State Department also intends to pull diplomats’ relatives from several other missions in the region.

Details:

• The numbers: Brent futures rose $1.29, or 1.2%, to $110.11 a barrel by 0034 GMT, while US West Texas Intermediate gained 97 cents, or 1%, to $98.12. Later readings put Brent up 1.71% at $110.67 and WTI up 1.42% at $98.53. Brent closed Wednesday little changed; WTI fell 67 cents.
• The attacks: The Iran-aligned Houthi movement struck several targets in Saudi Arabia on Wednesday, killing at least one person and wounding eight at a civilian airport in Dammam. A separate drone attack on a Saudi oil field killed two people.
• The US order: State Department spokesperson Tommy Pigott said on X that the departure order applies only to Saudi Arabia, citing a rise in Houthi attacks on civilian targets. Non-emergency government staff and their families were told to leave the kingdom, after reports that some personnel across the wider Gulf had been directed out.
• Strike planning: The New York Times, citing unnamed US officials, reported that the American and Israeli militaries have drawn up specific plans for fresh strikes on Iran after next month’s midterm elections, with planning for what the paper described as a short but intense operation well advanced.
• Tehran’s response: Iranian Foreign Minister Abbas Araghchi told the Financial Times on Wednesday that his country is fully prepared to defend itself. President Masoud Pezeshkian told state media that the United States cannot expect dialogue while imposing a blockade on Iran and issuing threats.
• Shipping risk: Kpler data show at least 18 attacks on maritime traffic over the past two weeks. London Stock Exchange Group analysts warned that Iran is targeting tankers well beyond the Strait of Hormuz, reaching into the Gulf of Oman, threatening crude loadings and the ship-to-ship transfers that support them. Iranian media reported explosions on Wednesday in the Sirik area of southern Iran, saying their origin remained unknown.
• US inventories: The Energy Information Administration said Wednesday that US crude stocks fell 3.06 million barrels to 412.5 million last week, far more than the 820,000-barrel draw analysts polled by Reuters had expected. Distillate stocks, including diesel and heating oil, rose 1.68 million barrels to 104.3 million against forecasts for a 1.16 million decline.
• The cushion: David Wagner, head of equities and portfolio manager at Aptus Capital Advisors, argued the economic hit from $100 oil is milder than in past decades, with prices far below inflation-adjusted records. He cited US government data showing gasoline took about 5% of average disposable income a decade ago, roughly double today’s share.
• Ukraine track: Russian President Vladimir Putin received US special envoy Steve Witkoff in St Petersburg on Wednesday for talks on ending the war in Ukraine. The Kremlin said Putin agreed to resume US-mediated peace talks with Kyiv as soon as possible, possibly by next month; Ukrainian President Volodymyr Zelenskyy voiced support for an early start.

Between the lines:

Two of the drivers behind Thursday’s move are risk premium rather than physical shortage: the diplomatic drawdown and the reported strike planning signal escalation that has not yet hit supply. The attacks on tankers beyond Hormuz and on a Saudi oil field are the part already touching barrels, which is why loading and transfer operations carry the heavier weight for prices.

What’s next

Watch whether the State Department extends departure orders beyond Saudi Arabia, the pace of Houthi attacks on Saudi energy and aviation targets, next month’s US midterms as the reported strike timeline marker, and the start date of US-mediated Russia-Ukraine talks.