Key facts
- Brent crude futures rose 0.8% to $106.58 a barrel.
- US West Texas Intermediate crude futures gained 0.9% to $94.94 a barrel.
- The Houthis attacked a Saudi Aramco building in Dhahran, causing a limited fire.
- Saudi Arabia raised oil production last month.
- Russia stated its diesel export deal with the US was not linked to peace talks with Ukraine.
Oil prices climbed on Wednesday as traders weighed supply risks from conflict in the Middle East against the potential for increased diesel supply from Russia.
Brent crude futures rose 89 cents, or 0.8%, to $106.58 a barrel by 0030 GMT, while US West Texas Intermediate crude futures gained 80 cents, or 0.9%, to $94.94. Brent had fallen 0.9% on Tuesday, while WTI rose 0.4%.
"Supply concern stemming from conflict between the Houthis and Saudi Arabia is driving prices higher," said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, a unit of Nissan Securities. "However, the expectation that increased Russian diesel exports will ease market tightness is likely to limit sharp price movement in either direction," Kikukawa said, projecting WTI to trade between $90 to $100 a barrel.
The energy ministry of Saudi Arabia stated that the Houthis attacked an administrative building belonging to state-owned oil firm Saudi Aramco in Dhahran, causing a limited fire. The Iran-allied group has been firing ballistic missiles and drones at Saudi Arabia over the past week in retaliation for the kingdom's support of Yemeni government forces. Riyadh's international airport has been hit four times, with a strike on Saturday killing 13 people.
Last month, Saudi Arabia increased oil production despite disruptions to shipments caused by the US-Iran war, leading to a sharp production increase from OPEC+ (the Organization of the Petroleum Exporting Countries and partners including Russia), OPEC said on Tuesday.
Two senior Iranian officials told Reuters that Iran is deploying new tactics to target ships in the Strait of Hormuz to keep oil prices high and influence US midterm elections.
In Russia, the government said on Tuesday it did not see any direct link between peace talks with Ukraine and its deal to export diesel to the US. This comment followed a Reuters report that US envoys had told Ukrainian officials on Friday that the deal was part of an attempt to draw Russia back to negotiations for a peace settlement.