Commerzbank’s Carsten Fritsch notes Brent Oil has surged to a six‑month high as geopolitical tensions around Iran, Houthi attacks in Saudi Arabia and risks in the Strait of Hormuz drive a substantial risk premium. The report details ongoing attacks on energy infrastructure and shipping, underscoring persistent supply risk and a tense regional backdrop for Brent Oil pricing.
Risk premium from Iran conflict
"The Brent oil price rose on Friday to USD 117.45 per barrel, its highest level in nearly six months, and closed at its highest weekly level since June 2022. Yesterday, a meeting took place in Tehran between high-ranking representatives from Iran, Turkey, Pakistan and Saudi Arabia to de-escalate tensions, according to the Saudi Arabian Foreign Minister. The situation in the Middle East remains tense."
"Attacks by Houthi rebels on targets in Saudi Arabia continue unabated. The Houthis claim to have struck pumping stations on the key east-west pipeline and the airport in the capital, Riyadh, over the weekend. Today, a fire broke out near Ras Tanura, Saudi Arabia’s largest export terminal on the Persian Gulf, following an attack, although the exact cause is still unclear."
"Prior to this, the headquarter of the state-owned oil company, oil fields and refineries had already been targeted by the Houthis. Iran’s attacks on ships in the Strait of Hormuz and nearby waterways reached their highest monthly level in October since the war began just under eight months ago, according to the Washington Institute for Near East Policy. Since the start of the month, there have been 28 confirmed and reported incidents, and 113 since the war began."
"Given this news, it is not surprising that a considerable risk premium has built up on the oil price, even though, according to a senior US military official, more than 1.5 billion barrels of oil have been transported through the Strait of Hormuz since the summer with the assistance of the US armed forces."
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