Oil approaches $110 as U.S. pulls diplomats, Middle East war deepens

The U.S. government ordered non-emergency government employees to leave Saudi Arabia as the war engulfing Iran widened across the Middle East, pushing oil prices above $110 per barrel and triggering a market sell-off in Asia.

The U.S. embassy in Riyadh said Monday that non-emergency American government employees and their family members were ordered to leave the Kingdom, citing heightened risks from armed conflict, terrorism and missile and drone attacks from Yemen and Iran. That marked the first such departure order issued by Washington in Saudi Arabia since the war began.

The move came as Iranian officials named Mojtaba Khamenei, son of the late supreme leader Ayatollah Ali Khamenei, as the country’s new religious and political authority, consolidating control over the Iranian Revolutionary Guard and other hardline groups.

Israel warned previously that any successor to Khamenei would be a potential target, while U.S. President Donald Trump threatened that a new leader in Tehran would be short-lived if the decision was made without his approval.

Trump is also reportedly weighing deploying special forces on the ground to seize Tehran’s near-bomb-grade uranium, Bloomberg reported, as officials sought to verify the location of the stockpile of highly enriched material.

Oil markets reacted sharply. Crude prices spiked above $110 per barrel Monday morning after several Middle East energy producers announced plans to cut output.

West Texas Intermediate jumped about 30%, or $27, to $117 per barrel. Global benchmark Brent advanced over 25% to $118. The last time oil prices breached $110 per barrel was after Russia invaded Ukraine in 2022.

The surge followed days of disruptions in the Strait of Hormuz, one of the world’s most important oil choke points. Tankers have avoided the narrow waterway after Tehran threatened to attack vessels attempting to transit the strait.

With shipments stalled, the United Arab Emirates, Kuwait and Iraq said they would slash production as supplies piled up.

U.S. Energy Secretary Chris Wright said Sunday that traffic through the Strait would resume once Washington destroys Tehran’s ability to threaten shipping.

“The grace period that the market had in place for most of last week, assuming that this thing would not get out of control and start to spread with contagion to other parts of the economy, has clearly come to an end,” said Clayton Seigle, chair in energy and geopolitics at CSIS. “We’re probably going to have a crisis period for longer. The market … is kind of scrambling to catch up.”

The Israeli military struck several Iranian oil facilities Sunday, igniting fires and sending thick smoke over Tehran and the neighboring city of Karaj. The attacks appeared to be the first on the country’s energy…