Key facts
- Brent crude futures were up 91 cents, or 0.9%, to $106.60 a barrel.
- US West Texas Intermediate crude was up $1.65, or 1.8%, to $95.79 a barrel.
- Iranian officials stated they are deploying new tactics to target ships.
- A container ship sank in waters south of the Strait of Hormuz after hitting a naval mine.
- The Houthis attacked an administrative building belonging to Saudi Aramco in Dhahran, causing a limited fire.
Oil prices rose on Wednesday after attacks on vessels in the Strait of Hormuz and Saudi Aramco's headquarters, with Iranian officials stating they are deploying new tactics to target ships. Brent crude futures were up 91 cents, or 0.9%, to $106.60 a barrel at 1110 GMT, while US West Texas Intermediate crude was up $1.65, or 1.8%, to $95.79 a barrel, a more than two-week high.
Analysts suggest these actions aim to keep oil prices high and influence US midterm elections. UBS analyst Giovanni Staunovo noted that attacks on ships crossing the Strait of Hormuz and military strikes between Saudi Arabia and the Houthis are supporting prices due to market concerns about lower oil exports from the region, although exports have held up so far.
Iranian officials told Reuters they had started to use different offensive tactics about 10 days ago, though they declined to provide details. Priyanka Sachdeva, head of market insights at Phillip Nova, said that Iranian officials openly admitting to undermining US efforts to keep oil prices under control speaks volumes about their intentions.
The Iran-allied Houthis attacked an administrative building belonging to Saudi Aramco in Dhahran, causing a limited fire, Saudi Arabia's energy ministry said. The group has been retaliating for the kingdom's support of Yemeni government forces with ballistic missiles and drones. Meanwhile, Iran's Revolutionary Guards Navy stated that a container ship sank in waters south of the Strait of Hormuz after hitting a naval mine, a day after the UK Maritime Trade Operations reported a container ship and a tanker were hit by unknown projectiles within the strait.
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, commented that expectations of increased Russian diesel exports easing market tightness are likely to limit sharp price movement. The International Energy Agency reported that Russia's crude oil production increased in September but remained down year-on-year, and noted that a lack of operational Russian refinery capacity means eased diesel export restrictions are unlikely to materially change the global gasoil market balance. The IEA also indicated that constrained diesel supplies could persist into next year.