Oil prices rose by more than 1% during trading on Wednesday, after the Houthis in Yemen announced they had targeted Saudi Arabia’s largest oil refinery with a missile, a development that revived concerns about the security of supplies from one of the world’s largest oil producers.
Brent crude futures rose by about 1.4% to $115.47 a barrel , and U.S. West Texas Intermediate crude also rose by the same percentage to $101.33 a barrel , after prices had fallen by about two dollars during Tuesday’s session.
The Iranian-backed Houthi rebels claimed responsibility for the attack on the Saudi refinery, which has a production capacity of approximately 550,000 barrels per day. Saudi authorities did not immediately confirm the attack, leaving markets on edge regarding the potential impact of the security developments on oil flows.
Commodity analysts at ING Bank believe that markets are still pricing in the possibility of renewed tensions, as investors await clarity on US President Donald Trump’s next steps regarding Iran. They noted that a successful election without renewed strikes on Iran could help reduce some of the risk premium currently supporting prices.
US oil inventories under scrutiny
On the demand and supply side, preliminary data from the American Petroleum Institute, according to market sources, showed that U.S. crude inventories fell by about 2.03 million barrels during the week ending October 23.
But forecasts compiled by Reuters indicated that inventories could rise by about 15,000 barrels, making the official U.S. Energy Information Administration report, due later on Wednesday, a key focus for investors to determine the actual direction of inventories.
OPEC+ and Russian exports are adding new factors to the market.
Markets are also awaiting a meeting of the OPEC+ alliance on Sunday, with expectations that oil production targets for December will remain unchanged. This comes at a time when production from most of the seven key participating countries—Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman—is below their targeted levels.
In another development, Russian crude oil exports from Baltic and Black Sea ports may decline next month, as domestic refineries increase diesel production following an agreement with Washington this month, according to traders.
Oil prices are currently being influenced by a combination of geopolitical risks, US inventory forecasts, and OPEC+ production decisions. The direction of prices will remain tied to the extent of regional tensions and whether supply concerns translate into actual disruptions to global oil flows.
