Brent crude rises to $110 as Washington orders diplomats out of Saudi Arabia

Brent crude futures rose $1.29, or 1.2%, to $110.11 a barrel early on Thursday. West Texas Intermediate (WTI) gained 97 cents to $98.12. The move followed a US order for some diplomats and their families to leave American missions in Saudi Arabia. Yemen's Houthis struck several Saudi targets on Wednesday. According to Reuters reporting carried by AsiaOne, the attacks killed at least one person at a civilian airport in Dammam and two people in a drone attack on a Saudi oil field. US officials also said the State Department plans to withdraw family members from other missions in the region.

Washington is acting on the supply side as well. The Department of Energy said it would lend up to nearly a third of the 1-million-barrel US emergency heating oil reserve. The aim is to contain prices that rose during diesel shortages linked to the wars in Iran and Ukraine. A reserve of that size can do little against a disruption across the Gulf, and the loan offer shows how tight middle-distillate supply has become.

Equities read the embassy orders as a risk signal. The Israeli business daily Globes reported that optimism had "given way to fear." It said Asian exchanges fell sharply, the Chinese market entered bear territory, and New York futures turned lower on the evacuation reports. Market data compiled by investingLive showed the Shanghai Composite down about 1%, extending a 10-week decline. Hong Kong's Hang Seng fell about 2.5%, Japan's Nikkei 225 fell about 1%, and South Korea's Kospi lost more. Gold did not benefit from the move into safety. It eased about 0.3% to around $4,113 an ounce.

Companies are already passing the costs along. Southwest Airlines cut its 2026 profit forecast on Wednesday because of higher fuel prices. It is the third major US airline to do so this month. The oil majors are on the other side of the same trade. OilPrice reports that they are set to post another strong quarter but are keeping capital spending flat, while several governments where they operate plan windfall taxes.

Seen through a sound-money lens, the price of crude is doing what central-bank policy rates cannot. It is rationing a scarce physical good and moving income from fuel consumers to producers. Central banks in importing countries now face a supply shock that rate policy cannot fix. If they ease policy to soften the blow to growth, they risk turning a change in relative prices into a general rise in prices.