March 30 (Reuters) - Oil prices extended gains on Monday after Yemen's Iran-aligned Houthis launched over the weekend their first attacks on Israel since the start of the U.S.-Israel war with Iran,
Brent eyes record monthly rise; US crude settles above $100 as Houthis join Iran war
Oil Markets React to Escalating Middle East Conflict
By Siddharth Cavale
NEW YORK, March 30 (Reuters) - Oil prices closed higher on Monday, with Brent heading for a record monthly rise, while U.S. crude futures settled above $100 a barrel for the first time since 2022 after Yemeni Houthis widened the Iran war by launching their first attacks on Israel.
Brent futures settled up 21 cents, or 0.2%, at $112.78 a barrel. Earlier in the session, Brent had climbed more than $4 to a high of $116.89. U.S. West Texas Intermediate futures finished up $3.24, or 3.3% at $102.88, its highest since July 2022.
Impact of Middle East Conflict on Oil Prices
Conflict has spread across the Middle East since U.S. and Israeli strikes on Iran began on February 28, stoking concerns over shipping routes around the Arabian Peninsula and the Red Sea.
Israel’s military said it intercepted two drones launched from Yemen on Monday, two days after Iran-aligned Houthis fired missiles at Israel for the first time since the start of the war. The Houthis have yet to target shipping in the Red Sea, which handles about 15% of global maritime traffic.
Potential Disruption to Shipping Routes
If the Houthis attack shipping and shut down the southern entrance to the Red Sea, it could drive prices up by $5 to $10 per barrel, according to Robert Yawger, director of energy futures at Mizuho.
Strait of Hormuz and Global Oil Supply
Iran’s effective closure of the Strait of Hormuz, a chokepoint for roughly a fifth of global oil and gas supplies, has sent oil prices up about 57% this month, the steepest monthly jump in LSEG data going back to 1988, exceeding gains made during the 1990 Gulf War. U.S. crude, meanwhile, has climbed by 53% for its biggest monthly gain since May 2020.
U.S. Treasury Secretary Scott Bessent said on Monday that the global oil market is well supplied, with more vessels travelling through the Strait of Hormuz.
Two Chinese container ships sailed through the Strait of Hormuz on their second attempt to leave the Gulf after turning back on Friday, ship-tracking data showed.
Political Reactions and Market Sentiment
Trump Issues Iran Warning Again
U.S. President Donald Trump warned on Monday that Iran's energy plants and oil wells would be obliterated if it does not open the Strait of Hormuz, after Iran described U.S. peace proposals as "unrealistic" and fired waves of missiles at Israel.
Previously, Trump said he would pause attacks on Iran's energy network until April 6. Trump has said the United States and Iran have been meeting "directly and indirectly" and that Tehran's new leaders have been "very reasonable."
Market Reactions to Political Statements
"Trump's extended deadline of April 6 - when the U.S. could potentially resume attacks on Iranian energy infrastructure – has had no reassuring effect. The market is now asking for concrete signs of de-escalation, not just rhetoric," SEB Research said in a note.
In a bid to assuage investors, the Group of Seven finance leaders on Monday said they stand ready to take "all necessary measures" to safeguard energy market stability and limit broader economic spillovers from recent volatility.
And in the United States, Federal Reserve Chair Jerome Powell on Monday said the U.S. central bank can wait to see how the Iran war affects the economy and inflation, indicating that a rate hike may not be on the cards.
Oil Supply Developments
Saudi, Nigeria Oil Flows Pick Up
Saudi crude exports redirected from the Strait of Hormuz to Yanbu port in the Red Sea reached 4.658 million barrels per day last week, data from analytics firm Kpler showed. That was a sharp increase from an average of 770,000 bpd in January and February.
Nigeria, a member of the Organization of the Petroleum Exporting Countries, has scheduled exports of four key Nigerian crude oil grades at 807,000 barrels per day in May, 3.1% higher than the 783,000 bpd scheduled to load in April, according to preliminary loading programs seen by Reuters.
Concerns Over Further Disruptions
Attacks in the Middle East, however, raised concerns about disruptions after a drone attack damaged Oman's Salalah terminal, while attacks were also reported in Kuwait and near Saudi Arabia.
US Oil Inventory Trends
In the United States, crude oil stockpiles were expected to have fallen last week, along with distillate and gasoline inventories, a preliminary Reuters poll showed on Monday. Crude inventories fell by about 1.3 million barrels in the week to March 27, according to four analysts polled by Reuters, after rising to their highest levels since June 2024 earlier in the month.
(Reporting by Siddharth Cavale in New York, Stephanie Kelly in London, Mohi Narayan in New Delhi and Florence Tan in Singapore; Editing by David Goodman, Alexander Smith, Susan Fenton, Will Dunham and Nia Williams)
