🛢️US deal with the Houthis excludes Saudis, but Aramco fixes pipeline quickly. Why the drop in Brent crude?

A potential agreement between the US and the Houthis drastically reshuffles the balance of power in the Middle East once again. Securing international shipping in the Bab al-Mandab Strait came at the cost of excluding Saudi Arabia, whose vessels are key to keeping the global oil balance in check, from this protection. Washington's rejection of requests for military support, combined with the Houthis gaining control over the Yemeni coast and Perim Island, gave the rebels a free hand to continue targeting Saudi infrastructure.

Recent attacks on Saudi Aramco installations in the Red Sea port city of Yanbu and on the base in Khamis Mushait show that Saudi oil exports are called into question. The sea route along the west coast is becoming highly risky, forcing Riyadh to reroute logistics and transport to Persian Gulf ports (e.g., Ras Tanura). Changing routes lengthens delivery times, increases freight costs, and raises insurance rates, imposing a permanent geopolitical premium on crude prices.

Aramco's quick response cools price fever

Despite the real geopolitical threat, the oil market ignored further attacks and reacted with a drop in prices. Saudi Aramco's swift response turned out to be the key fundamental factor. The company undertook intensive work to build a bypass for the main long-distance pipeline damaged in last week's attack.

Aramco plans to restore about half of the main line's capacity in just a few days, and regain full transmission capacity in about six weeks. This information removed the threat of a sudden, complete paralysis of East-to-West supplies from the market and gave investors an excuse to take profits following previous dynamic gains.

Brent Crude Technical Analysis (D1)

The sharp drop in WTI oil during today's session was partly a technical effect resulting from contract rolling. Nevertheless, we are observing a clear pullback in prices on both key benchmarks today. The latest upward wave in Brent crude reached a model 1:1 geometry target relative to the previous impulse, and after reaching a local peak, the price is currently oscillating around $105.

The market is facing a key resistance zone between $106.86 and the recent high near $110, reinforced by the 23.6% Fibonacci retracement. A sustained break above the $110 level will open the way for bulls toward $120.

The first and most important support barrier for demand is the psychological level of $100.00 (38.2% Fibo). Should a deeper correction occur, another strong buffer is formed by the 50-day and 100-day moving averages (SMA 50 and SMA 100) in the $90.47–$91.03 area (along with the 61.8% Fibo level at $88.58). The main defensive level for the entire trend remains the $80.00 region, where the 250-period moving average runs. The current pullback is a local correction within a strong uptrend. As long as the price stays above $100 per barrel, buyers retain full control.