Brent Holds Above $105 After Houthi Strikes on Riyadh: What It Means for Currencies
Oil markets spent the start of this week reacting to a grim set of headlines. Houthi forces struck King Khalid International Airport in Riyadh on three consecutive days, closing the airport and pushing Brent crude to $106.65 a barrel on Monday, its highest settlement since mid-September. WTI finished at $93.74. On Tuesday, prices eased slightly, with Brent closing at $105.69 and WTI at $94.14, but both remain well above the $100 mark that has become a key level for traders.
What Happened in Riyadh
The first strike, on October 10, killed at least 14 people and wounded more than 300, making it one of the deadliest attacks on Saudi Arabia in decades. More strikes followed on the weekend and into Monday. Some reports put the combined toll across the attacks at 18 or more. The airport is closed through at least Saturday, October 17. Saudi Arabia’s energy minister has promised a “serious response” and said the kingdom’s investment plans continue.
The attacks come as the broader US-Iran conflict enters its eighth month, with Iranian restrictions on shipping through the Strait of Hormuz keeping supply tight for much of the year.
Tight Supplies, Not Just Headlines
The market is not only reacting to the news cycle. Goldman Sachs notes that global diesel supplies are under real strain: US diesel inventories are down about 14% from a year earlier, visible stocks in China are down 11%, and seaborne diesel exports have fallen roughly 20% year on year. That context explains why a new security scare can lift prices quickly.
Pulling in the opposite direction, President Trump has defended a decision to temporarily ease restrictions on Russian diesel supplies, a move that has drawn bipartisan criticism but has capped some of the upside in prices.
Why This Matters for Forex
Oil is one of the most direct links between the geopolitical news and your trading screen. Here is how it tends to flow through the major currencies:
- Canadian dollar and Norwegian krone: both come from major oil-exporting economies and usually benefit from higher crude. The Canadian dollar has held firm while markets wait for US inflation data.
- Euro and yen: both economies import much of their energy, so higher oil weighs on their terms of trade. This is part of the pressure on EUR/USD and USD/JPY right now.
- US dollar: the US is a large oil producer, but higher fuel prices push inflation up, which strengthens the case for Fed rate hikes and supports the dollar.
The Inflation Link
US gasoline is averaging about $4.36 a gallon, roughly $1.28 higher than a year ago, with diesel running about $2.60 higher. Those numbers feed directly into today’s CPI report. Higher fuel costs help explain why headline inflation is expected to climb toward 3.6% to 3.7% while core inflation stays much calmer.
What to Watch
- Saudi Arabia’s response to the airport attacks, which could escalate or calm the situation
- The $100 level on Brent: analysts say prices would likely hold near it without a real de-escalation
- Russian diesel developments, which could add supply and soften prices
- Energy-sensitive pairs such as USD/CAD, EUR/USD and USD/JPY around today’s US data
The Takeaway
With the conflict still unresolved and supplies already tight, oil is likely to remain a market driver. For forex traders, the key point is that crude no longer just moves oil-linked currencies. It shapes inflation, central bank expectations and risk sentiment across the board. Keep an eye on the headlines, and remember that oil-driven moves can reverse as fast as they appear.
This article is for informational purposes only and does not constitute financial or investment advice. Forex trading involves substantial risk of loss.