Oil prices rose in the early hours of Asian trading on Wednesday due to new Houthi attacks on Saudi Arabia. These attacks have reignited concerns about oil supply in the region.
Increase in Oil Prices
Currently, the price of Brent crude oil futures has reached $115.70 per barrel, reflecting a 1.62% increase in this session. Additionally, the price of West Texas Intermediate futures has risen by 1.34% to $101.20 per barrel.
Read more: Escalation of Tensions in the Oil Market with Increased Iranian Naval Attacks
This price increase follows a nearly $2 decline on Tuesday, which was attributed to hopes for diplomatic negotiations among Saudi, Turkish, Pakistani, and Iranian officials.
Attacks on Oil Facilities
More immediate concerns for oil markets relate to reports that the Ras Tanura oil facilities in Saudi Arabia have been targeted. The Houthis claim to have attacked the Ras Tanura refinery, which has a capacity of 550,000 barrels per day, with a ballistic missile. As of the time of this report, Saudi officials have not confirmed that the refinery was hit, and no independent evidence of extensive damage or major operational disruption has been released.
Reports indicate that a fire near Saudi Aramco facilities in Ras Tanura was brought under control following an attack early Tuesday. However, the extent of any damage remains unclear.
While details regarding the attack on the refinery are vague, a broader wave of attacks has been well documented. Saudi officials reported that three ballistic missiles targeting the Eastern Province of Saudi Arabia and four drones directed towards southern Saudi Arabia were intercepted by the country's air defense.
Additionally, Saudi civil defense also intercepted two missiles that were launched towards Riyadh. In these attacks, part of a building, a construction site, and a vehicle were damaged.
Political and Economic Implications
In another matter, the Houthis have claimed to have attacked the Saudi Ministry of Defense in Riyadh and damaged military aircraft, but these claims have also not been confirmed. For oil markets, Ras Tanura remains a critical element of these attacks, as this location combines significant refining capacity with a vital export terminal in the Persian Gulf.
Concerns about recent attacks on Saudi Arabia have been influenced by a new report from The Wall Street Journal, which claims that the United States has warned several Gulf Arab countries to prepare for the possibility of a short and intense military campaign following the November 3 midterm elections.
Additionally, information regarding U.S. oil inventories has also provided further support for oil prices. The American Petroleum Institute estimated that crude oil inventories fell by approximately 2.03 million barrels in the week ending October 23. The positive impact of this report has been somewhat offset by increases in gasoline and distillate inventories.
Traders are now closely awaiting the EIA inventory report on Wednesday to see confirmation of these trends.
Read more: Iran and Russia's Oil and Gas Cooperation Comes into Focus · Aramco Offers Cheap Oil to Europe
