Market Move

Oil prices rose on Wednesday as fighting between Iran‑backed Houthi rebels and the Saudi‑backed Yemeni government heightened fears of supply disruption. Brent crude futures for December climbed 1% to settle at $110.45 a barrel, while U.S. West Texas Intermediate (WTI) December contracts gained 2% to close at $101.94 a barrel.

Trigger Event

The price increase followed a statement from the Houthis that they had targeted Ras Tanura refinery, Saudi Arabia’s largest oil‑processing facility. The group has also recently struck Riyadh’s King Khalid International Airport and pumping stations along the East‑West oil pipeline that bypasses the Strait of Hormuz.

Geopolitical Context

The attacks occur amid intense fighting in Yemen and come as a quadrilateral dialogue involving Iran, Pakistan, Saudi Arabia and Türkiye continues, aiming to strengthen regional peace and security. Concerns were raised about the security of alternative export routes, especially as shipping through the Strait of Hormuz recovers from earlier disruptions linked to the Iran war.

Supply‑Side Assessment

Energy strategist Walt Chancellor of Macquarie noted that current transit volumes remain “relatively robust,” with Strait of Hormuz flows at approximately 10+ million barrels per day (MBD), Red Sea transits at ~3‑4 MBD, and Fujairah loadings exceeding 2 MBD. Collectively, exports from Hormuz‑affected countries stay at or above 15 MBD, a level the strategist believes is sufficient to limit or pause global inventory draws, resulting in a marked slowdown in global stock draws over the past month.

U.S. Inventory Data

U.S. commercial crude oil inventories excluding the Strategic Petroleum Reserve (SPR) fell by 1.9 million barrels in the week ending 23 October, bringing the total to 410.6 million barrels, contrary to analysts’ expectation of a modest 100,000‑barrel increase. Including the SPR, overall inventories dropped 2 million barrels to 693.2 million barrels, the lowest level recorded since October 1983.

Political Commentary

Media reports indicated that President Donald Trump is contemplating a short, intense military campaign against Iran following the U.S. mid‑term elections. Trump told reporters, “It’s a question of when do I want to end it…They’ve wanted to make a deal, but they like tapping it along. Maybe they’re waiting for the election or something — but that’s not gonna help them.”

Contributors

The article was contributed by Ayushman Ojha and Scott Kanowsky.