Middle East Oil Supply Risk: Crude Near $104 a Barrel

Renewed attacks in the Gulf region now threaten Middle East oil supply, with crude at about $104 per barrel on Monday. The move matters to FX traders because oil exporters such as Saudi Arabia and Kuwait, and large buyers such as China, sit at the centre of the story.

Key Takeaways

Price gap: Crude is up from just under $70 per barrel before the war began in February.
Shipping attacks: At least 16 vessels have been attacked while navigating the Strait of Hormuz this month.
Partial recovery: Kuwait produces about 2 million barrels per day, roughly 75% of its prewar level.

What Happened

Houthi attacks hit Saudi Arabia, including a deadly strike on Riyadh's airport. Separate attacks targeted tankers in the Strait of Hormuz, businessreport.com reported.

Saudi Arabia redirected exports through the East-West Pipeline to the Red Sea. It quickly repaired earlier damage to the line.

Crude exports have partly recovered with U.S. military assistance and alternative shipping routes. The report does not give a benchmark for the $104 price.

Background

The war in the Middle East began in February. Iranian crude exports have largely disappeared since a U.S. naval blockade.

Governments have already used strategic stocks, including one coordinated release in March. Global refining capacity also struggles to meet demand.

Market Impact

Crude oil: The price is about $104 per barrel, against just under $70 before the war. The attacks target both production-side routes and tanker traffic.
Diesel: Prices are at record highs in several markets, including the U.S., which raises freight and transport costs.
USD/CNY: China is beginning to increase oil purchases again, which ties the pair to import demand and fuel costs. The rate was 6.6883 (reference rate, 2026-10-12).
USD/KWD and USD/SAR: Both Kuwait and Saudi Arabia are oil exporters, so export volumes and revenue are the relevant channel. Reference rates were 0.3094 and 3.7500 (reference rate, 2026-10-12). They are daily levels, and no FX move is reported.

What to Watch Next

Route security: The East-West Pipeline and alternative maritime routes both remain vulnerable to further attacks.
Export sustainability: Longer routes and higher transport costs make current export levels hard to sustain.
Reserve levels: Strategic reserves are dwindling, and industry leaders expect volatility to continue, potentially into 2027.

Bottom Line

This is a supply-security story, not yet a currency story. Oil-linked currencies are exposed through exporters' shipping volumes and importers' fuel costs, and both depend on routes that remain contested.

Middle East Oil Supply Under Attack as Crude Near $104