Oil Surges 4-5% After Houthi Missile Strike on Saudi Arabia Then Pulls Back on US-Iran Hormuz Talks

Oil prices swung sharply on Thursday after Yemen's Houthi forces fired ballistic missiles at Saudi Arabia, driving US crude up roughly $4 a barrel and Brent above $108 a barrel, a gain of about 5%, before gains were pared on reports that Washington and Tehran are discussing a phased deal to reopen the Strait of Hormuz and end the blockade.

Saudi Arabia said it intercepted six ballistic missiles launched by the Houthis, reigniting fears of broader Middle East escalation and pushing prices to session highs. Brent traded in a range of $101.83 to $108.23 a barrel during the session, reflecting the volatility as traders rapidly repriced geopolitical risk. Heating oil futures briefly turned negative as the initial spike reversed.

Reports of a phased US-Iran agreement on Hormuz quickly capped the rally, with crude tumbling from its highs as traders weighed the prospect of restored shipping lanes against the risk that hostilities persist. The Oil and Gas Journal noted that progress on any diplomatic settlement remained uncertain, with traders balancing eventual resolution hopes against the likelihood that restricted Hormuz traffic continues longer than expected.

Equity markets felt the pressure, with the S&P 500 falling 0.36%, the Dow Jones Industrial Average down 0.44%, and the Nasdaq 100 declining 0.55% as rising crude prices weighed on sentiment. UK stocks also fell on the day. An additional bullish underpinning for oil came from reports that Asia is on track to import its highest volume of crude since the start of the US-Iran war, adding to demand concerns even as the geopolitical picture remained unsettled.