Oil Price Hits Five-Month High Amid Houthi Strikes in Saudi Arabia as Energy Shares Slide

Highlights

• Brent crude settled overnight at US$113.17 per barrel, up 4.00% and its strongest close since 4 May, and was at US$113.47, up 0.26%, in Asian trade.
• Washington told its non-emergency government staff in Saudi Arabia, and their families, to leave as Houthi attacks escalate.
• The S&P/ASX 200 Energy index fell 2.19% to 10,708.4 even as crude prices climbed.

Introduction

The oil price has reached its highest level in five months as attacks by Yemen's Houthi movement on Saudi Arabia raise fresh fears over Middle East supply. Overnight, Brent crude futures settled at US$113.17 per barrel, up 4.00% from the previous settlement of US$108.82.

In Asian trade, Brent was little changed at US$113.47, up 0.26%.

Supply Fears Lift Oil

Saudi Arabia is the world's largest crude exporter.

On Wednesday, US time, State Department spokesperson Tommy Pigott said non-emergency US government staff and their families had been ordered to depart Saudi Arabia, covering that country only. He cited growing Houthi hostilities, including strikes on airports and other key infrastructure that had caused civilian casualties and heavily disrupted travel. The department's travel advisory rates Saudi Arabia at Level 3, reconsider travel.

West Texas Intermediate, the US benchmark, ended the session 2.39% higher at US$99.47 a barrel. It was at US$99.84 in Asian trade, up 0.37%.

ASX Energy Shares Move Lower

Local oil and gas stocks moved the opposite way to crude, with the S&P/ASX 200 Energy index down 2.19% at 10,708.4.

On Thursday, Santos Limited (ASX: STO) published third-quarter figures.

Production hit a record 26.3 mmboe in the three months. However, the company narrowed 2026 production guidance to 99–102 mmboe, from 99–105 mmboe, mainly because of slower commissioning and weather and pipeline outages at its Alaskan Pikka development. Sales volume guidance was narrowed to 102–105 mmboe.

Woodside Energy Group Ltd (ASX: WDS) reported a 12% rise in third-quarter production on the June quarter to 46.2 MMboe, with operating revenue up 2%.

Petrol and Inflation

Official figures show the price of automotive fuel jumped 14.8% in August alone. The statistics bureau linked that jump to dearer global crude and the end of the federal fuel excise relief. On an annual basis, fuel prices were 13.5% higher in August. Annual headline inflation lifted to 4.0% in August, compared with 3.5% in July. Transport ranked second among contributors to yearly inflation.

September CPI data, including quarterly figures, is due on 28 October, six days ahead of the Reserve Bank's November policy meeting.

Share Price Movement

Santos was at AU$8.90, down 3.16%. Woodside traded at AU$32.21, down 1.71%.

Karoon Energy Ltd (ASX: KAR) fell 4.07% to AU$1.65. Beach Energy Limited (ASX: BPT) eased 0.54% to AU$0.925.

Fuel refiners and retailers also weakened. Ampol Limited (ASX: ALD) was at AU$39.08, down 2.01%. Viva Energy Group Limited (ASX: VEA) slipped 2.42% to AU$2.82.

Across the wider market, the S&P/ASX 200 was at 8,777.9, down 0.17%.

What Investors Should Watch

• Further Houthi strikes on Saudi energy sites and any official response.
• Whether Brent holds near its five-month high.
• Quarterly CPI figures out on 28 October, followed by the RBA decision on 3 November.

Conclusion

Crude has climbed on supply risk in the Gulf, but ASX energy shares have not followed.

For households, the rise in oil adds to fuel costs that already pushed inflation higher in August. Next week's CPI data will show how much of that has carried through.

Note- All data presented is based on information available at the time of writing.

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