Key takeaways
- Brent crude climbs toward $116 after refinery attack claim
- Houthis claim missile strike on Saudi Arabia's Ras Tanura
- Supply fears return despite ongoing Middle East diplomacy
Oil prices jumped nearly 2% on Wednesday, October 28, after Yemen's Houthi movement claimed it struck Saudi Arabia's largest oil refinery with a ballistic missile, renewing fears of supply disruptions across the world's biggest crude-exporting nation.
December Brent futures rose 1.9% to approximately $116.03 per barrel, while US West Texas Intermediate gained 2% to $101.91, according to Dow Jones Newswires.
The rally followed Tuesday's decline of nearly $2 per barrel as diplomatic negotiations briefly eased market concerns. Saudi authorities, however, had not confirmed the claimed refinery strike or reported any resulting production losses.
Houthis Claim Missile Strike on Saudi Arabia's Ras Tanura Refinery
The Houthis announced Tuesday that they had targeted Saudi Aramco's Ras Tanura refinery in the kingdom's Eastern Province with a ballistic missile.
The facility can process approximately 550,000 barrels of crude per day and sits near one of Saudi Arabia's most important oil export terminals.
Houthi representatives claimed the missile struck its target and caused fires, but independent confirmation of damage was unavailable.
Saudi Arabia separately reported intercepting three ballistic missiles directed toward its Eastern Province and four drones targeting the country's southern region.
Those interceptions do not independently establish whether Ras Tanura was damaged.
The incident follows another Saudi Aramco attack on October 21, when intercepted drone debris killed two workers near the Shaybah oilfield.
Saudi officials said Shaybah production continued despite that incident, underscoring the difference between infrastructure threats and actual supply losses.
Brent Crude Rebounds as Supply Risks Overshadow Peace Talks
The latest price increase highlights how quickly geopolitical concerns can reverse oil-market sentiment.
Earlier this week, discussions involving Iran, Saudi Arabia, Pakistan and Turkey raised hopes that regional tensions could ease.
However, repeated threats to Saudi facilities and commercial shipping have prevented traders from fully removing the risk premium attached to crude prices.
ING commodity strategists said Wednesday that markets still reflected concerns about renewed escalation.
Coinpaper previously reported that Brent reached $111.75 following tanker attacks and threats against Saudi energy infrastructure.
The market has since moved considerably higher.
JPMorgan recently estimated oil's fundamental value near $94 per barrel, suggesting a substantial geopolitical premium when Brent trades around $116.
That model-based estimate is not a forecast that crude will immediately return to $94.
Could Oil Prices Reach $120?
The immediate risk is that further attacks could cause confirmed interruptions to refining, production or exports.
A sustained disruption at Ras Tanura could tighten refined-fuel supply, although the refinery's processing capacity should not be confused with an equivalent loss of Saudi crude production.
The next OPEC+ meeting is expected to leave December production targets unchanged, according to Reuters.
Meanwhile, Saudi Aramco has warned that depleted global inventories could take years to rebuild, leaving the market sensitive to further shocks.
The latest rally also arrives as America's emergency oil reserves stand at their lowest level since 1982.
For consumers, elevated crude prices have already contributed to higher gasoline costs across the United States.
