（Singapore, 08.09.2026）Oil prices surged towards US$100 a barrel on Tuesday after attacks forced several energy facilities in Saudi Arabia to halt operations, widening the impact of the Middle East conflict and adding fresh pressure to already tight global fuel markets.
Brent crude climbed more than 2% and approached US$100 a barrel before giving up some gains to trade near US$99. The global benchmark has risen more than 60% this year as the Iran war, disruptions in the Strait of Hormuz and attacks on energy infrastructure have reduced supplies.
The latest escalation came after Iran-backed Houthi forces in Yemen launched drones and missiles at four cities in southern Saudi Arabia, including targets linked to state oil giant Saudi Aramco. Saudi authorities said fires broke out at several sites and 73 people were injured, including women and children.
Among the targets was Jazan, a major Red Sea port that is home to a refinery capable of processing about 400,000 barrels a day. The Houthis also said they targeted energy facilities in Abha and Najran as well as a Saudi airbase in Khamis Mushait.
The attacks mark a significant expansion of the six-month-old Middle East conflict and raise the risk that disruptions could spread beyond the Strait of Hormuz, which has been at the centre of concerns over global energy supplies.
Saudi Arabia is the largest producer in the Organization of the Petroleum Exporting Countries, making any disruption to its energy infrastructure particularly important for global markets. The kingdom has also been using alternative export routes as shipping through Hormuz remains constrained.
Supply Tightness Spreads to Fuel Markets
Before the conflict, about a fifth of global oil and liquefied natural gas shipments passed through the Strait of Hormuz. Middle East crude shipments have since fallen to around 11 million barrels a day from 18 million barrels before the Iran war began, according to Argus data cited by Reuters.
Traffic through Hormuz slowed again at the start of this week after Iran threatened retaliation for further US attacks. Kpler data showed seven commodity vessels sailed through the waterway on Monday, compared with eight the previous day, although some ships may have been operating without their tracking systems switched on.
Vitol Group Chief Executive Russell Hardy estimated that oil flows through Hormuz are currently around 10 million barrels a day, roughly half their pre-war level, although he cautioned that volumes are difficult to measure and can fluctuate sharply.
The shortage is becoming even more visible in refined fuels. Hardy estimated that the market has lost around 2 million barrels a day of Middle Eastern exports and another 2 million barrels from Russia as Ukrainian drone attacks damage Russian refining infrastructure.
Europe’s benchmark diesel price is approaching US$200 a barrel, while average US retail diesel prices have risen to a record of more than US$5.90 a gallon. Higher fuel costs are increasing inflation concerns and could complicate efforts by central banks to keep interest rates under control.
Physical oil markets are also showing greater stress than headline crude prices suggest. November-loading Dubai and Oman crude were trading at premiums of around US$19 to US$20 a barrel above Dubai quotes, while Oman futures were above US$104 a barrel and cash Dubai exceeded US$105.
Despite those signs of tightness, Brent has so far struggled to stay above US$100 because some supplies continue to reach the market through alternative routes while weaker demand has helped offset part of the shortfall.
Saudi Arabia and other Gulf producers have increasingly used alternative ports and ship-to-ship transfers outside Hormuz. Saudi exports through the Red Sea port of Yanbu have come under pressure from Houthi activity, but shipments from Egypt’s Sidi Kerir more than doubled between June and August. Iraqi, Kuwaiti and United Arab Emirates exports have also provided additional supply.
Producers outside OPEC are helping fill part of the gap, with the US, Canada and Guyana expected to increase combined production by about 1.4 million barrels a day this year.
Demand has weakened at the same time, particularly in China. Rystad Energy estimates that reduced consumption of petrochemicals and transport fuels has cut global demand by about 3.5 million barrels a day in the third quarter, with China accounting for more than half of the decline as electric vehicles and coal-based chemicals reduce oil use.
China’s large crude reserves have also provided some reassurance to traders. Kpler estimates the country holds about 1.17 billion barrels in reserves, while Chinese refiners increased crude purchases in August and have been exporting more refined products, providing some relief to fuel markets.
Still, analysts are becoming more cautious about how long the disruption could last. Goldman Sachs modestly raised its oil forecasts on expectations that Middle East shipping problems will continue into 2027, while Morgan Stanley expects Brent to average US$100 a barrel in the fourth quarter.
Oil prices eased from Tuesday’s highs after Iranian Foreign Minister Abbas Araghchi said there had been “significant progress” in talks with Oman over establishing a temporary transit route through Hormuz. Iran has said an agreement could provide safe passage for ships, although tensions remain high after the US fired on Iranian tankers over the weekend and Tehran warned of further retaliation.
With Saudi energy facilities now joining tankers and key shipping routes as targets in the conflict, traders are watching whether the attacks cause lasting production or export disruptions and whether negotiations over a temporary Hormuz transit route can restore more oil flows to the global market.
