Brent Nears $110 Then Tumbles On IEA Demand Destruction Warning As Houthis Threaten Saudi Oil Escape Route, Diesel Shock Goes Global

Brent crude futures nearly topped $110 a barrel in the overnight hours but fell 3.5% to the $103 handle by 6 a.m. ET, after reports from the International Energy Agency that soaring fuel costs could spark global demand destruction.

The global benchmark remained on course for its biggest weekly advance since July. Prices have soared more than 70% this year as the Hormuz chokepoint remains disrupted, energy infrastructure attacks continue from the Gulf to the Russia-Ukraine theater, and renewed Chinese buying of crude in various global markets bids up local prices.

“A resumption of a full-blown Saudi-Houthi war would be a potential catalyst for our high oil price scenario coming to fruition,” RBC Capital Markets analyst Helima Croft wrote in a note. 

The big news overnight was a report that Iran-backed Houthis claimed to have hit Saudi Arabia’s East-West pipeline, which feeds an export terminal on the Red Sea and effectively bypasses the Hormuz chokepoint. There’s also news that the Houthis advanced toward coastal areas bordering the strategic Bab al-Mandeb Strait, gaining ground in their push to seize Mokha near the southern end of the Red Sea.

Just to put the sheer SCALE of this attack into perspective…

The smoke stretched more than 100 km across the Saudi desert and was visible from space even when zoomed all the way out to a global view of Earth.

See for yourself: https://t.co/qLhyb7cH8v pic.twitter.com/z5kmQa2dTx

— Soar (@SoarAtlas) September 11, 2026

The Gulf crisis shows no signs of slowing as US forces took out several Iranian tankers this week and Tehran warns of further escalation.

More bad news for global energy markets: Saudi Arabia’s oil production fell again last month to its lowest level since 1990.

CHART OF THE DAY: Saudi Arabia and Russia (the world’s 2nd and 3rd top oil producers) suffered significant output drops in August due to the Iran and Ukraine wars, respectively. Combined, Riyadh and Moscow pumped last month ~5.5m b/d less than they did in January (@IEA data). pic.twitter.com/YJNn0A9kg3

— Javier Blas (@JavierBlas) September 11, 2026

Capital Economics commodities expert Hamad Hussain warned that depleted inventories and early signs of recovering Chinese demand leave prices vulnerable to another interruption in Middle East flows.

Former Goldman Sachs commodities chief and current Real Macro head Jeff Currie joined CNBC TV on Thursday and said that it’s actually Chinese buyers who are bidding up crude: “Actually, I put a bigger weight on China coming back to the market,” he said, citing strong buying interest after returning from Singapore and Hong Kong.

The more consequential crisis isn’t necessarily about crude supply, because the global economy doesn’t run on that. Instead, it’s the diesel shortage rippling through the world. The US diesel crack spread currently trades around $110 a barrel. Prices at US pumps for the industrial fuel average $6 a gallon, a record high, while prices at some gas stations in California topped $9.99 per gallon.

“Brent holding above $105 with Houthi/Bab al-Mandab disruptions raising fears of a double chokepoint. 10y bunds yields highest since 2009, 10y US within reach of the 5% level,” UBS analyst Justinus Steinhorst wrote in a note.

However, there is some good diplomatic news from the Gulf: Bloomberg reports that the six-member bloc of Gulf states is considering meeting with Iranian officials next week to discuss the Hormuz chokepoint.