Brent heads for record monthly jump as Iran conflict widens

Oil prices extended gains on Monday, with Brent headed for a record monthly rise, after Yemeni Houthis launched their first attacks on Israel over the weekend, widening the U.S.-Israel war with Iran in the Middle East.

Brent crude futures jumped $3.09, or 2.74%, to $115.66 a barrel by 2353 GMT after settling 4.2% higher on Friday.

U.S. West Texas Intermediate was ‌at $102.56 a barrel, ⁠up $2.92, ⁠or 2.93%, following a 5.5% gain in the previous session.

Brent has soared 59% this month, the steepest monthly jump, exceeding gains seen during the 1990 Gulf War, after the Iran conflict effectively closed the Strait of Hormuz, a conduit for a fifth of the world’s oil and gas supplies.

The war, launched on February 28 with U.S. and Israeli strikes on Iran, has spread across the Middle East, with ⁠Yemen’s Iran-aligned Houthis ‌on Saturday launching their first attacks on Israel since the start of the conflict, raising concern about shipping lanes around the Arabian ⁠Peninsula and the Red Sea.

“The conflict is no longer concentrated in the Persian Gulf and around the Strait of Hormuz, but now extends into the Red Sea and the Bab el-Mandeb – one of the world’s most crucial chokepoints for crude and refined product flows,” JP Morgan analysts led by Natasha Kaneva said in a note.

Saudi crude exports re-directed from the Strait of Hormuz to the Yanbu port in the Red Sea reached 4.658 ‌million barrels per day last week, data from analytics firm Kpler showed. If exports from Yanbu were disrupted, Saudi oil would need to pivot toward Egypt’s Suez-Mediterranean (SUMED) pipeline to ⁠the Mediterranean, JP Morgan analysts said.

Attacks in the region escalated over the weekend and damaged Oman’s Salalah terminal despite efforts to start ceasefire talks.

Iran said it was ready to respond to a U.S. ground attack, accusing Washington on Sunday of preparing a land assault even as it sought negotiations.

Pakistan’s Foreign Minister Ishaq Dar said they had covered possible ways to bring an early and permanent end to the war in the region as well as potential U.S.-Iran talks in Islamabad.