Oil prices rise as Iran war escalates with Houthi attacks
· Axios
Oil prices climbed above $116 per barrel after markets opened Sunday, as Iran-backed Houthi militants fired missiles and drones at Israel over the weekend and promised to continue attacks.
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Why it matters: The increase came as the war moved into its fifth week, showing little sign of abating despite President Trump's talk of diplomacy.
Driving the news: The global benchmark Brent crude rose 3.3% to $116.25 per barrel.
- WTI, the main U.S. reference, was also up about 3% to nearly $103 per barrel.
The big picture: More than 3,500 U.S. troops, including about 2,500 Marines, arrived in the Middle East, officials said Saturday.
- The speaker of Iran's parliament, Mohammad Bagher Ghalibaf, threatened to set U.S. troops "on fire" and step up attacks on American allies, according to Iranian official media.
- The Houthis claimed responsibility for a missile attack on Israel on Saturday, raising concerns about the rebel group entering the fighting.
- Israel said it intercepted the missile from Yemen — the first time it has seen an attack from that country since the war began.
Friction point: Rep. Jim Himes (D-Conn.), the House Intelligence Committee's top Democrat, accused President Trump Sunday of "flat-out lying" about negotiating with Iran and said Trump has emboldened the Iranians.
- "The Iranians have now realized they have the reins," Himes said on "CBS This Morning." "Gasoline prices are up more than $1 a gallon. They have realized, 'Holy smokes, we've got a lot of leverage here.'"
- Gasoline prices edged closer to the $4-a-gallon mark on Sunday, rising from $3.976 to $3.98 a gallon, per AAA.
Energy historian Daniel Yergin, vice chairman of S&P Global, said Sunday he remains concerned that the Houthis will disrupt shipping lanes in the Red Sea, an alternative to the Strait of Hormuz.
- The Iranians have blocked most oil traffic in the strait, which handles about one-fifth of the world's seaborne oil trade.
- "If the Houthis step up their attacks, if they join their allies in really attacking shipping or scaring people away from the Red Sea, that will aggravate what is already the most severe oil disruption that we have seen in history," Yergin said on Fox News.
Yes, but: Eurasia Group analysts predicted in a Saturday note that payoffs from Saudi Arabia will likely prevent the Houthis from launching major attacks against that country's extensive oil infrastructure.
- But Eurasia Group said "the probable escalation of the war against Iran will push the Houthis to take some selective action that does not fully disrupt Saudi oil flows."
Zoom in: American Petroleum Institute President Mike Sommers, appearing Sunday on Fox News, said increased domestic oil production has prevented prices from spiraling further out of control.
- "Here we are in the United States where we produce over 13 million barrels of oil every single day," Sommers said.
- "If we were in the same position that we were in 10 years ago when we were only producing 5 million barrels a day, prices would have spiked significantly higher."