Brent crude jumped 4.71% on Thursday to $107.93 a barrel, and U.S. benchmark West Texas Intermediate rose 4.58% to $96.38, after Saudi Arabia said its air defenses intercepted ballistic missiles fired by Yemen's Houthi movement and separate U.S.-Iran talks on reopening the Strait of Hormuz broke down at the United Nations General Assembly. Brent is now up more than 7.5% for the week and has gained upwards of 17% so far in September.
The Houthis said they had launched missiles and drones at a "sensitive target" in Riyadh, at Saudi military sites in the Jazan region, and at Aramco facilities in the Red Sea city of Yanbu. Houthi military spokesman Yahya Saree said the strikes on Jazan hit command centers, weapons depots and missile launch sites.
"Accurate and direct."
Yahya Saree, Houthi military spokesman, on the Jazan strikes
Saudi authorities said they intercepted six ballistic missiles aimed at the Taif region and Yanbu and did not immediately confirm damage from the other reported strikes.
Diplomacy Falters at the UN
The renewed attacks landed just as indirect talks between Washington and Tehran on the sidelines of the UN General Assembly failed to produce a breakthrough. Iranian negotiators had floated a road map involving a regionwide ceasefire, a gradual reopening of the Strait of Hormuz and an end to the U.S. naval blockade of Iranian oil exports, but Iranian security chief Mohsen Rezaei said Tehran would not reopen the strait until its conditions were met. A similar framework, agreed in a June memorandum of understanding, collapsed within weeks into renewed fighting, leaving traders skeptical that this round of diplomacy will fare better.
Some supply-side relief emerged alongside the price spike: Saudi Arabia's East-West pipeline, damaged earlier by drone strikes, has reopened, and the kingdom sold roughly 100 million barrels to Asian buyers for October-November delivery, according to reporting from The National. That has not been enough to offset the geopolitical risk premium building into prices.
A Persistent Risk Premium
"The ever-looming risk of supply disruptions appears to be inflating a persistent risk premium" in oil prices, said Norbert Rucker, an economist at Julius Baer, noting that markets are pricing in disruptions to Gulf shipping lanes that have not yet materialized. Roughly a fifth of global oil supply moves through the Strait of Hormuz, and any sustained closure or insurance-driven avoidance of the waterway would ripple through global supply balances tracked by the International Energy Agency.
For now, traders are treating each escalation — a Houthi missile, a stalled negotiating session — as a fresh reason to bid up crude, even as underlying inventories remain adequate. Analysts said the market will stay hostage to headlines out of Yemen, Riyadh and the Iranian delegation in New York until a durable de-escalation, rather than another short-lived memorandum, materializes.
