Global oil prices climbed in early trading on Wednesday, October 28, as renewed Houthi attacks on Saudi Arabia heightened concerns over potential supply disruptions in the Middle East, reinforcing geopolitical risk premiums in an already volatile crude market.
As at the time of writing 5:18 am (WAT), Brent crude was trading at $115.40 per barrel, up 1.36 per cent, while West Texas Intermediate (WTI) rose 1.46 per cent to $101.40 per barrel. The gains followed a decline of nearly $2 per barrel on Tuesday amid hopes that diplomatic talks involving Saudi Arabia, Turkey, Pakistan and Iran could ease regional tensions.
Market concerns intensified after the Houthis claimed to have struck Saudi Arabia’s Ras Tanura refinery, which has a capacity of approximately 550,000 barrels per day. Saudi authorities had not confirmed a direct hit on the facility, and the extent of any damage or operational disruption remained unclear. Saudi officials, however, reported intercepting missiles and drones targeting parts of the kingdom, while reports also indicated that a fire near Saudi Aramco facilities at Ras Tanura had been contained.
Ras Tanura is strategically important to the oil market because of its substantial refining capacity and its role as a major crude export terminal on the Persian Gulf. Any sustained disruption to the complex or associated export infrastructure could tighten regional supply availability and increase pressure on international crude prices. However, the market impact will depend on whether the reported attacks translate into confirmed damage or interruptions to production, refining or exports.
Geopolitical concerns were compounded by a report that the United States had warned some Gulf Arab countries to prepare for the possibility of a short, intense military campaign after the November 3 US midterm elections. The prospect of further military escalation involving Iran has added uncertainty to the outlook for regional oil flows, although the reported plans had not been independently confirmed in the source material.
US inventory data also provided support for prices. The American Petroleum Institute estimated that crude oil stocks fell by approximately 2.03 million barrels in the week ended October 23. However, increases in gasoline and distillate inventories tempered the bullish signal. Traders were awaiting the US Energy Information Administration’s inventory report for confirmation of the trend.
For oil market participants, the immediate focus remains on developments around Saudi energy infrastructure, the security of export routes and the potential for further regional escalation. Confirmed disruptions to major facilities or export flows could sustain upward pressure on crude prices, while renewed diplomatic progress or evidence that infrastructure operations remain unaffected could ease some of the risk premium.