KEY POINTS

• Brent crude held near $110 per barrel on Friday, heading for a third consecutive week of gains.
• West Texas Intermediate traded close to $100 per barrel but was on course to end the week about 0.5 per cent lower.
• Attacks near the Red Sea, including strikes affecting Saudi airports and an Aramco oil field, heightened concerns about regional supply disruptions.
• Saudi Aramco ordered the evacuation of its Dhahran headquarters on Thursday, according to reports.
• US petrol prices stood at $4.29 per gallon, while diesel averaged about $6.31, reflecting significant increases from a year earlier.

MAIN STORY

Oil prices edged higher on Friday as attacks near the Red Sea heightened concerns that the conflict in the Middle East could escalate and threaten energy supplies.

Brent crude futures held at around $110 per barrel, putting the international benchmark on course for a third consecutive week of gains. West Texas Intermediate (WTI), the US benchmark, traded near $100 per barrel but was on track to finish the week approximately 0.5 per cent lower.

The price movements came amid increased attacks in the Red Sea region, including incidents affecting Saudi Arabian airports and an Aramco oil field earlier in the week. The developments have raised concerns about the security of energy infrastructure in a region central to global oil production and trade.

Saudi Aramco ordered the evacuation of its headquarters in Dhahran on Thursday, according to a Reuters report cited by Yahoo Finance. The evacuation was described as the company’s first since the Iran war began.

According to the report by Yahoo Finance, geopolitical uncertainty also intensified following a report by The New York Times that the United States and Israel had drawn up plans for renewed attacks on Iran after next month’s US midterm elections. The reported plans raised expectations of further fighting, although they do not establish that new attacks will take place.

The United States has also ordered nonessential embassy personnel to leave Saudi Arabia following attacks on airports and oil fields in the country.

President Donald Trump has said he would not attack Iran before the midterm elections and has suggested that fuel prices would decline afterward. However, continued attacks and uncertainty over the next phase of the conflict have kept attention focused on the risk of further disruption to energy markets.

Fuel prices in the United States remain elevated. National petrol prices stood at $4.29 per gallon on Friday, about $1.22 higher than a year earlier. Diesel prices were around $6.31 per gallon, approximately $2.68 above their level at the same time last year.

Refined fuel prices in parts of the United States could face additional pressure following a power outage at a refinery in the Chicago area. The disruption is expected to push regional prices higher.

Gulf Oil chief energy adviser Tom Kloza warned that petrol prices could reach $5 per gallon in several Midwestern states, including Michigan, Ohio, Minnesota, Illinois and Indiana.

THE ISSUES

The latest price movements show how geopolitical risk can influence oil markets even before a major disruption to production or exports is confirmed. Traders factor in the possibility that attacks could spread, infrastructure could be damaged or transport routes could become less secure. These risks can increase prices as buyers and investors reassess the likelihood of supply shortages.

The difference between Brent and WTI also matters. Brent, the international benchmark, was heading for a third consecutive weekly gain, while WTI was expected to finish the week slightly lower. This divergence suggests that the benchmarks were responding differently to market conditions, rather than moving uniformly in response to the regional tensions.

For fuel consumers, crude oil is only one part of the price equation. Refinery outages can restrict the supply of petrol and diesel even when crude production remains available, creating additional pressure in specific markets. The Chicago-area outage illustrates how operational problems can compound the effects of geopolitical uncertainty.

For Nigeria, sustained increases in international crude prices could support government oil revenue and foreign-exchange inflows, depending on production volumes, export performance and the terms of crude sales. However, higher global prices can also increase domestic fuel costs where imported refined products or replacement supplies are priced against international markets.

The net effect on Nigeria would therefore depend on how much crude the country produces and sells, the performance of domestic refining, exchange-rate conditions and the extent to which higher international prices are passed through to consumers and businesses. Higher oil prices do not automatically translate into proportionate gains for the wider economy.

WHAT’S NEXT

Oil traders will be watching for further attacks on energy infrastructure and any evidence that the conflict could widen to involve additional military action against Iran. Any confirmed disruption to oil production, exports or shipping could intensify pressure on prices, while signs of de-escalation could ease some of the geopolitical premium.

The US midterm elections next month are another point of uncertainty because President Trump has linked his position on potential attacks against Iran to the election timetable. The reported US and Israeli plans for renewed strikes remain a risk factor rather than a confirmed decision to launch an operation.

Fuel markets will also be watching the effects of the Chicago-area refinery outage, particularly whether it causes the regional price increases anticipated by industry advisers.

For Nigeria, the important indicators will include international crude benchmarks, domestic production and export volumes, and changes in the cost of refined fuel. These will help determine whether higher oil prices translate into stronger public revenue or add to pressure on businesses and household spending.

BOTTOM LINE

Brent crude remained near $110 per barrel as attacks around the Red Sea and fears of a wider Middle East conflict increased concerns about energy security. The direction of prices will depend on whether the regional tensions lead to actual supply disruptions, while refinery problems are adding a separate source of pressure to fuel prices in parts of the United States.

Source: Yahoo Finance