Oil Rises to $94 Following Houthi Attack on Aramco Refinery and Strait of Hormuz Tensions

Crude oil prices rose during the trading week ending August 21, 2026, with Brent crude closing at $94.08 per barrel, up 3.3% weekly, while West Texas Intermediate (WTI) closed at $87.48, up 2%.

The rise came against the backdrop of a drone attack launched by the Houthis on an Aramco refinery in the city of Jazan, southwestern Saudi Arabia, adding a tangible geopolitical risk premium to prices. This coincided with ongoing US-Israeli-Iranian tensions threatening shipping traffic in the Strait of Hormuz.

According to estimates by Oxford Economics, approximately 20% of global oil supplies pass through the Strait of Hormuz, making it a strategic corridor in which markets cannot tolerate any disruption. Saudi Aramco has resumed loading oil tankers through the strait after weeks of relying on alternative routes.

Estimates indicate that Saudi Arabia needs an oil price of around $80 per barrel to balance its budget, meaning current price levels provide a comfortable margin for the government treasury. However, continued geopolitical tensions keep the market on edge, as any further escalation could push oil toward the $100 threshold for the first time in two years.

What Do These Terms Mean?

Geopolitical Risk Premium: A portion of the oil price exceeding actual production costs, paid by buyers against the risk of supply disruptions due to conflicts. This premium rises during times of tension and falls with stabilizing conditions.

Strait of Hormuz: A narrow waterway between Iran and the Sultanate of Oman, considered one of the world's most critical petroleum shipping chokepoints. Its closure or disruption would lead to a severe shortage in global oil supplies.

Brent Crude: The global benchmark for crude oil prices, extracted from the North Sea, whose price is used to price most oil transactions worldwide.