Brent crude futures breached the $100 per barrel mark on Thursday, surging 6.7% to settle at $100.37, following a confirmed strike on a tanker in the Red Sea. West Texas Intermediate (WTI) also advanced, climbing 5.5% to $91.91, marking its fifth consecutive session of gains. The rally in oil prices, however, failed to translate into proportional gains for U.S. energy equities, highlighting a divergence that analysts interpret as a market repricing of transport risk rather than a reassessment of long-term earnings potential.
Leading U.S. producers saw only modest upticks, with shares of Exxon Mobil (XOM) and Chevron (CVX) each rising roughly 2.0% during active cash trading. Diamondback Energy (FANG), Devon Energy (DVN), ConocoPhillips (COP), and Occidental Petroleum (OXY) posted gains between 1.5% and 2.6%. Refiners lagged further, with Valero Energy (VLO), Marathon Petroleum (MPC), and Phillips 66 (PSX) edging up just 0.7% to 1.1%. The S&P 500 traded approximately 1% lower on the day, reflecting broader market caution.
The gap between crude’s rally and equity performance was stark. Brent crude rose roughly 3.4 times more than the leading producers, while refiners trailed even more. European diesel margins hovered near $65 per barrel, underscoring the immediate strain on refined product markets. The futures curve reflected this short-term pressure: the three-month Brent spread widened to $9.26 in backwardation, its highest level since May 22, representing nearly 10% of the prompt settlement price.
The catalyst for the price spike was a reported attack on Saudi oil tankers in the Red Sea. Houthi forces claimed responsibility for targeting two vessels. Saudi officials confirmed a fire onboard the Encelia, while the UK Maritime Trade Operations (UKMTO) reported that a tanker was struck by an unidentified projectile southwest of Al Shuqaiq. No independent confirmation was available for the second alleged attack. The incident follows a pattern of escalating tensions in the region, which have already prompted shifts in shipping routes.
Shipping data revealed that five tankers changed direction on Wednesday, with two indicating a route toward the Suez Canal rather than departing through the southern Red Sea. According to Kpler data, the Bab el-Mandeb strait saw 7.4 million barrels per day pass through in June, accounting for 7% of global supply and marking a 76% increase from the previous year. Over 70% of Saudi Arabia’s typical crude shipments have already been redirected to the port of Yanbu. John Evans of PVM Energy noted that crude from Yanbu could take over 50 days to reach China, compared to just over 20 days on the regular route.
Ahmad Assiri, research strategist at Pepperstone, commented that markets had already factored in “a worrying probability of supply interruptions in a second chokepoint.” Goldman Sachs (GS) maintained its Brent forecast for the fourth quarter at $80 per barrel but cautioned that continued disruption to both major shipping routes could drive prices past $120. The bank’s base case remains roughly 20% below Thursday’s spot price, suggesting that much of the current premium could be temporary if transit normalizes.
Vessel movement is emerging as the next key focus for investors. Prolonged detours would constrain tanker availability and delay shipments to Asia, amplifying the prompt premium. A further confirmed attack could push crude prices, shipping rates, and diesel costs higher simultaneously. Conversely, uninterrupted transit through Bab el-Mandeb could rapidly erase the current risk premium, underscoring the balanced nature of the risks ahead.
