Crude oil prices increased significantly on Tuesday, with Brent futures rising approximately 3.5% to nearly $104 per barrel and West Texas Intermediate (WTI) futures growing about 3% to $96 per barrel. This surge was driven by attacks in the United Arab Emirates that disrupted regional energy flows amid the ongoing conflict involving the US, Israel, and Iran.

Disruptions in the UAE

The Abu Dhabi National Oil Company (Adnoc) suspended crude oil loading at the UAE's Fujairah port following a drone strike that caused a fire. Additionally, a joint venture between Adnoc and Occidental paused operations at the Shah sour gas field due to another drone strike. These incidents have raised concerns about alternative routes for Gulf exports, diverting some focus from the constrained Strait of Hormuz.

Impact on Oil Flows and Market Dynamics

The conflict continues to constrain oil and gas flows through the critical Strait of Hormuz, with approximately 190 million barrels of oil and refined products reportedly stuck on ships in the Persian Gulf. In response, Saudi Arabia has increased exports from its Yanbu port to 3.5 million barrels per day this month, up from 1.2 million barrels per day a year ago, with potential to reach nearly 5 million barrels per day in the coming weeks.

Divergence in Global Oil Benchmarks

Despite the disruptions, Atlantic Basin benchmarks like Brent and WTI have remained "relatively contained" since the war began. In contrast, Middle Eastern benchmarks such as Dubai and Oman are trading much higher, with cash prices around $155 per barrel, as they are more directly exposed to regional export disruptions and better capture marginal scarcity.

Other Market Movements

In related markets, Henry Hub natural gas futures were flat, settling around $3.04 per million British thermal units, while US stock markets saw gains of less than 1% in Tuesday's trading.