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Oil prices rise over 1% after reported attack on Saudi refinery raises supply concerns
Oil prices rise over 1% after a reported Houthi attack on a Saudi refinery raises supply concerns, while US crude stocks fall and Middle East tensions persist.
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Oil prices rose by more than 1% on Wednesday. Prices increased after Yemen's Iran-aligned Houthi group reported an attack on a major oil refinery in Saudi Arabia. The report raised concerns about possible disruptions to global oil supplies amid ongoing conflicts in the Middle East.
Brent crude prices climbed to $115.24 per barrel. Brent crude futures rose by $1.36, or 1.2%, as of 0858 GMT on Wednesday, according to Reuters market data. US crude oil prices also recorded gains. West Texas Intermediate (WTI) crude futures rose by $1.62, or 1.6%, to $101.52 per barrel at the same time.
Saudi Arabia oil refinery attack
Houthis claimed they attacked Saudi Arabia's biggest oil refinery. Yemen's Iran-aligned Houthi group said on Tuesday that it had hit the refinery with a missile. The claim raised concerns about a possible threat to Saudi Arabia's oil production and exports, Reuters reported.
Saudi Arabia had not yet confirmed the reported attack. The refinery can process 550,000 barrels of oil every day. Saudi Arabia is the world's largest crude oil exporter and the second-largest producer of crude oil.
Middle East tensions and oil prices
Investors are worried that tensions in the Middle East could rise again. Oil traders are factoring in a greater chance of renewed conflict in the region, commodity strategists at ING said on Wednesday. The possibility of further attacks has added to concerns about the security of global oil supplies.
Also read: US Treasury yields rise ahead of Fed interest rate decision; 10-year yield tops 5%
Markets are waiting for US President Donald Trump's next move on Iran. Oil prices remain high as investors seek more clarity on how the US president will respond to tensions involving Iran, ING strategists said, according to Reuters.
US midterm elections and crude oil
The US midterm elections could affect oil market sentiment. The elections are scheduled for November 3. ING strategists said that if the elections pass without renewed US strikes on Iran, some of the extra risk added to oil prices could begin to fade. This would depend on tensions not escalating again, they added.
US crude oil inventories fall
US crude oil inventories fell last week, contrary to market expectations. Crude stocks in the US dropped by 2.03 million barrels in the week ended October 23, according to data from the American Petroleum Institute (API), cited by market sources.
Analysts had expected US crude oil stocks to increase slightly. A Reuters poll of analysts had forecast a rise of 15,000 barrels for the week. The reported fall in inventories added another development for oil traders to consider as they assessed supply and demand.
Official US inventory figures were due later on Wednesday. The US Energy Information Administration (EIA) was scheduled to release its latest oil stock data. Traders were watching the report for further information about US crude supplies.
OPEC+ oil production targets
OPEC+ producers are expected to keep their December oil output targets unchanged. The oil-producing group's next industry meeting is scheduled for Sunday. People familiar with the matter told Reuters that oil producers are expected to keep their December production targets unchanged.
However, oil production in seven major OPEC+ countries is still below their set targets. These countries are Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman. Actual production below target levels means the countries are not producing as much oil as their agreed output limits would allow.
Russian oil exports may fall
Russian oil exports could fall next month. Crude oil shipments from Russia's Baltic Sea and Black Sea ports may decline as domestic refineries increase diesel production, traders told Reuters.
A recent deal with Washington could affect Russia's oil exports. Traders said Russian refineries are expected to raise diesel output following a deal reached with the US this month. The increase in domestic refining could leave less crude oil available for export through Russia's Baltic and Black Sea ports, they said.
