Oil prices rose more than 1 percent on Wednesday after Yemen’s Houthi group claimed a missile strike on Saudi Arabia’s biggest oil refinery, raising fresh concerns about supplies from one of the world’s largest crude exporters.
Brent crude futures climbed $1.59, or 1.4 percent, to $115.47 a barrel by 9:35am Pakistan time. US West Texas Intermediate (WTI) crude gained $1.43, or 1.4 percent, to $101.33 a barrel.
The gains came a day after prices fell by nearly $2, as renewed attacks in the region brought supply risks back into focus.
The Houthis said on Tuesday they had struck Saudi Arabia’s largest oil refinery with a missile, escalating their campaign against the kingdom, the world’s second-largest crude producer. Saudi authorities had not immediately confirmed the attack on the facility, which has a processing capacity of 550,000 barrels per day.
The latest developments have added to market concerns over the possibility of further escalation in the Middle East, while traders remain uncertain about Washington’s next move towards Iran.
“For now, the market is still pricing in a greater likelihood of re-escalation,” ING commodity strategists said on Wednesday.
They added that oil prices would remain elevated as traders waited for greater clarity on US President Donald Trump’s approach to Iran. If no fresh strikes on Iran take place after the elections, the risk premium built into oil prices could begin to fade, the strategists said.
Meanwhile, US crude inventories offered a mixed signal for the market.
Commercial crude stocks fell by 2.03 million barrels in the week ended October 23, according to data from the American Petroleum Institute cited by market sources. That contrasted with a Reuters poll of analysts, which had pointed to a modest increase of about 15,000 barrels.
Traders were awaiting the US Energy Information Administration’s official weekly inventory report later on Wednesday for a clearer picture of domestic supply.
Attention is also turning to Sunday’s OPEC+ meeting, where oil-producing countries are expected to keep their December output targets unchanged, according to people familiar with the matter.
Actual production remains below official targets for most of the seven core members: Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman.
Adding to the uncertainty, Russia’s crude exports from its Baltic and Black Sea ports could decline next month. Traders said domestic refiners were preparing to increase diesel production following a deal with Washington earlier this month.
With geopolitical tensions, uncertain supply trends and upcoming policy decisions all in play, oil markets remain sensitive to developments that could tighten global supplies.
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