Brent crude jumps 2.81% to $111.88 as Saudi attacks escalate

Brent touched an intraday high of $112.55 a barrel before settling the move at $111.88, up 2.81% on the day. US West Texas Intermediate climbed $2.04, or 2.1%, to $99.19, having earlier broken through $100. For UK buyers, oil sets the tone for wholesale gas and power pricing even where contracts are not directly oil-indexed, because LNG cargoes and freight costs move with the crude curve.

The trigger was a wave of Houthi strikes on Saudi targets on Wednesday, killing at least one person and injuring eight at a civilian airport in Dammam, with a further two deaths from a drone strike on a Saudi oil field. Reuters reported that Saudi Aramco has told staff to evacuate its Dhahran headquarters and work from home, while the US State Department has ordered some diplomats and their families out of missions in Saudi Arabia. PVM Oil analyst Tamas Varga told Reuters that no de-escalation is expected before the US midterm elections, which 'should keep oil prices high'.

What this means for UK commercial buyers

Middle East crude exports were running at roughly 17 million barrels per day last week, according to Morgan Stanley, so volumes have so far held up despite the attacks. The risk buyers are pricing is a chokepoint event: the Strait of Hormuz has already seen vessel strikes and reported mine collisions this week, and Bloomberg noted that fears of a wider conflict are now driving the premium as much as any confirmed loss of barrels. That distinction matters for contract timing, because premiums built on fear can unwind quickly if shipping continues unimpeded, but they can also compound fast if a tanker or facility is hit.

The chart below tracks Brent over recent months, giving buyers a baseline against which to judge how much of today's spike is fresh risk premium.

• Fixed contracts renewing in the next one to three months face the sharpest exposure to this spike
• Flexible or index-linked buyers should watch day-ahead moves rather than react to a single session
• Diesel and heating oil costs are already elevated, prompting the Trump administration to offer up to a third of the 1-million-barrel US emergency heating oil reserve
• Strait of Hormuz shipping activity is the key signal to track for any confirmed supply loss
• Sites with high transport or logistics exposure will feel diesel pass-through costs before power and gas contracts reprice

A parallel development may offer some longer-term reassurance on gas. The Kremlin said Vladimir Putin agreed to resume US-mediated peace talks on Ukraine as early as next month, following his meeting with US special envoy Steve Witkoff in St Petersburg, with Volodymyr Zelenskiy backing an immediate start. Any credible progress there would ease one of the two geopolitical risk premiums currently sitting in European gas forwards, even as the Middle East situation keeps the other one firmly in place.

What to watch next: shipping data out of the Strait of Hormuz over the coming days, any confirmed damage to Saudi production or export infrastructure, and whether the Russia-Ukraine talks produce a firm date. Any one of these could move the oil-to-gas pass-through before your next renewal window opens.