Brent crude holds near 5-month high as W Asia tensions stoke supply fears

Oil prices advanced on Tuesday, with Brent reaching a five-month high, as traders priced in a ​geopolitical risk premium from Houthi attacks on Saudi infrastructure and ​reports of vessel attacks in the Gulf.

Yemen's Iran-aligned Houthis said on ‌Monday they launched several attacks on Saudi energy, airport and military targets, such as an Aramco site in Yanbu, the Shaybah oilfield, Riyadh's King Khalid International Airport and Abha airport.

Saudi authorities did not immediately confirm the Houthi claims and Reuters could not independently verify them.

Brent crude futures rose to $111.05 a barrel, the highest since May, and as of 0810 GMT were trading at $110.80, up $1.25 or 1.1%.

 

US West Texas Intermediate crude rose as high as $104.94, the highest ‌since September, and was last at $104.80, up $1.14 or 1.1%.

"Oil prices remain well-supported ... This suggests the market is pricing in a significant risk premium, given the situation's volatility," ING analysts said in a note on Tuesday.

"However, if flows continue uninhibited despite the geopolitical environment, the risk premium would likely erode slowly. Clearly, there are no signs of this ​yet."

At least 18 vessels were reportedly attacked over two weeks, which keeps the risk ‌premium intact, shiptracker Kpler said in a note on Monday.

Also on Monday, a Houthi attack on a training camp for government ​security ‌forces in Yemen's Shabwa province killed 58 people and injured more than ‌200.

The renewed attacks heightened fears about regional stability and underscored continuing risks to energy supply from the region, keeping oil prices above $100 ‌a ​barrel.

In the US, ​analysts expected crude oil stockpiles to have fallen last week along with product inventories, a preliminary Reuters poll showed on Monday.