Oil Whipsaws: Houthi Missiles on Yanbu Send Brent to $106.60, Then Hormuz Talk Hopes Pare the Rally

Thursday's oil session was a tug-of-war: a Houthi missile barrage on Saudi Arabia's Red Sea export corridor drove Brent to a one-week high, up about 3%, before reports of U.S.-Iran talks over reopening the Strait of Hormuz pulled prices off their peaks.

Crude traders got it from both directions Thursday: a Houthi missile attack on Saudi Arabia's Red Sea export corridor sent the benchmarks up as much as 5% intraday, and reports of U.S.-Iran talks over reopening the Strait of Hormuz knocked them back down before the settlement.

The settlement left Brent at $106.60 a barrel — a $3.52 gain, or 3.4% on the day. U.S. West Texas Intermediate finished at $94.61, up $2.45 (2.7%). At their session highs, both contracts were up about 5%. Brent posted its strongest close since September 15, while WTI's gain broke a six-session slide that had taken roughly 13% off the contract.

The rally did not carry into Friday. By 0212 GMT, Brent had eased to $105.73 — down 87 cents, or 0.82% — while WTI traded at $93.05, off $1.56 (1.65%), as markets weighed the possibility of a U.S.-Iran truce against the strikes on Saudi Arabia.

Six missiles, zero impacts — but the target list rattled traders

The Saudi-led coalition in Yemen said the kingdom's air defenses intercepted six ballistic missiles that Yemen's Iran-backed Houthis fired at Taif province and the Yanbu area on the Red Sea. Saudi civil defense authorities issued emergency alerts for Makkah, the northwestern province of Tabuk, Jeddah, Yanbu and Taif, and later noted the danger had passed.

The Houthis, for their part, claimed dozens of ballistic missiles and drones fired at Jazan province in the kingdom's southwest. In recent days they have also been blamed for attempted attacks including on Riyadh, the Saudi capital.

The target list is what moved markets. Yanbu is Saudi Arabia's Red Sea export hub and the terminus of the East-West Pipeline — the kingdom's bypass around the Strait of Hormuz. A strike on the alternative export route, days after the pipeline restarted, revived the supply fears that had been draining out of prices.

The pipeline is pumping again; the tankers aren't loading yet

Saudi Arabia is restoring crude flows through its East-West Pipeline toward the Red Sea export hub of Yanbu — but tanker loadings there have not yet resumed, according to industry sources, satellite imagery and shipping data.

The pipeline was shut on September 11 after drone attacks that Riyadh blamed on Iraqi militia. Its restart improves the prospect of oil exports resuming from Yanbu — but with tanker loadings still idle, the physical market remains tight. The port is key to Saudi crude when shipments through the Strait of Hormuz are disrupted.

The talks: a phased Hormuz reopening for sanctions relief

In New York, U.S. and Iranian negotiators are exploring a phased way out of the war — Tehran would reopen the Strait of Hormuz in exchange for Washington lifting its economic blockade of Iran, according to sources close to the talks. The strait has become the central bargaining chip in efforts to end the nearly seven-month U.S.-Iran conflict, with Iran seeking relief from the blockade choking its economy and Washington seeking free passage for ships on the blocked global oil route.

The talks face a big obstacle: neither side wants to be the first to surrender its leverage, according to comments to Reuters by two Iranian sources, two regional officials and two Western diplomatic sources. On Thursday, Iranian President Masoud Pezeshkian said it was up to the U.S. to choose when the war will end. Nothing has been agreed, and the diplomatic track remains as uncertain as the military one.

The market math behind the whipsaw

Thursday's jump interrupted a slide: WTI had fallen about 13% over the prior six sessions before its 2.7% bounce. For the week so far, WTI is down 6.42% while Brent is up 2.09% — and the unusually wide WTI-Brent spread "also reflects the different regional risk profiles at play," said Tim Waterer, chief analyst at KCM Trade.

The bigger picture: around a fifth of the world's oil and gas shipments have been curtailed since the war began in late February — a shock that pushed prices up 50% in March alone. Separately, talk of a U.S. diesel-export ban sent European gasoil up 7% earlier in the week before the White House walked it back.

What to watch now: whether tanker loadings resume at Yanbu, whether the New York talks produce anything concrete, and whether the Houthis — who declared a naval blockade of Saudi Arabia in July and recently seized Yemen's Red Sea coast down to the Bab el-Mandeb strait — escalate further.