Oil prices rose after deadly attacks in Saudi Arabia increased fears that escalating hostilities in the Middle East could affect supplies, despite accelerated exports through the Strait of Hormuz.
Brent crude rose to hover near $111 a barrel, while West Texas Intermediate crude traded at around $99.
A drone strike targeting Saudi Aramco's Shaybah oil field killed two people but did not disrupt operations, while an attack on King Fahd International Airport in Dammam resulted in one death. The United States has asked some American embassy staff and their families to leave the kingdom.
The price of Brent crude, the global benchmark, has jumped by about 80% this year after oil flows from the Arabian Gulf were disrupted by the war between the United States and Iran, which is nearing its ninth month, with limited signs of a resolution.
However, crude exports have recently increased and are approaching pre-conflict levels, with oil tankers switching off their transponders to avoid detection, although restrictions on shipments of petroleum products remain in place.
Rebecca Babin, senior energy trader at CIBC Private Wealth Group, said that continued military activity and the risk of renewed escalation after the midterm elections are keeping prices at a floor. She added: The result is a market that is struggling to sustain upward momentum, but confidence in the sustainability of selling is also limited.
Gulf oil exports are nearing pre-war levels
Kuwait is among the Gulf producers increasing their oil shipments, now exporting volumes similar to those before the outbreak of the US-Iran war, according to Sheikh Nawaf Al-Sabah, CEO of the country's state-owned oil company. However, he noted the need for more tankers to transport jet fuel and diesel.
Iran has intensified its attacks on shipping in the Strait of Hormuz in recent weeks, while Houthi militants backed by Tehran have targeted Saudi Arabia. The United States and Israel have drawn up plans to launch new strikes against Iran after the U.S. midterm elections next month, according to The New York Times, citing U.S. officials and others familiar with the discussions.
Harris Khurshid, chief investment officer at Karobaar Capital, said: “Until there are more tangible developments on the diplomatic front, it will be difficult for prices to continue falling significantly.”
Russian diesel deal with Washington and US oil inventories
Pressure on oil product flows from the Gulf, coupled with escalating Ukrainian attacks on Russian refineries, has led to even higher prices for refined products, particularly diesel.
Governments are resorting to drawing on stockpiles to alleviate supply shortages, while US President Donald Trump is pushing for measures to lower prices before the midterm elections, including an agreement with Moscow on diesel.
A tanker carrying Russian diesel is scheduled to sail to the United States on Thursday, as Moscow begins implementing the supply agreement, TASS news agency quoted Deputy Prime Minister Alexander Novak as telling reporters on Wednesday. The ship has a capacity of 40,000 metric tons, equivalent to about 300,000 barrels.
In the United States, distillate fuel stocks rose by nearly 2 million barrels, according to government data released Wednesday, providing some relief to diesel and heating oil markets. Crude oil inventories fell by just over 3 million barrels, with another 300,000 barrels being drawn from the Strategic Petroleum Reserve.
Latest oil price movements
Brent crude futures for December delivery rose 2.1% to $111.12 a barrel by 6:26 a.m. London time. West Texas Intermediate crude futures for December delivery also climbed 1.9% to $98.99 a barrel.
