Crude oil prices rose in early trading on Wednesday as renewed attacks by Yemen’s Houthi movement on Saudi Arabia and heightened security risks around the Strait of Hormuz revived concerns over the reliability of Middle Eastern oil supplies. The gains came as traders weighed the threat of further disruptions against the prospect of additional diesel supplies from Russia.
As at the time of writing at 04:15 am (WAT), Brent crude rose 0.81% to $106.50 per barrel, while West Texas Intermediate (WTI) gained 0.89% to $94.98 per barrel, according to the market prices provided. The recovery followed mixed trading in the previous session, with Brent declining while WTI posted a modest gain.
The immediate catalyst was a fresh escalation in attacks on Saudi Arabia, including a strike on an administrative building belonging to state-owned oil giant Saudi Aramco in Dhahran, which caused a limited fire. Reuters reported that the attacks have heightened market concerns about the security of Saudi energy infrastructure and the risk of further disruption to regional oil flows.
The attacks come amid intensifying hostilities between Saudi Arabia and the Iran-aligned Houthis, who have launched missiles and drones at Saudi targets in recent days. For oil traders, the concern extends beyond direct damage to production facilities to the possibility that escalating hostilities could threaten pipelines, export terminals and shipping routes used to move crude to international markets.
The Strait of Hormuz remains another major source of supply risk. The strategic waterway handles a substantial share of global oil shipments, and renewed attacks on tankers have increased uncertainty over the recovery of crude exports from the Persian Gulf. According to ICIS, four tankers were hit by unidentified projectiles while transiting the strait in separate incidents on October 11, underscoring the security challenges facing vessel operators.
Despite the security risks, efforts to keep oil moving through the region have continued. ICIS reported that US Central Command said American forces and regional partners helped move more than 19 million barrels of crude through the Strait of Hormuz on October 12. However, continued shipments have not eliminated the market premium associated with the risk of further attacks and possible interruptions to exports.
Meanwhile, expectations of increased Russian diesel exports could limit further gains in oil prices by easing pressure on refined-product supplies. The proposed US-Russia diesel arrangement has introduced a potential source of additional supply, although its impact will depend on the volumes delivered and the timing of those shipments. Traders are therefore balancing the immediate threat of Middle Eastern supply disruptions against the prospect of improved product availability.
The Organisation of the Petroleum Exporting Countries (OPEC) has also raised its forecast for global oil demand growth in 2027, projecting an increase of 2.55 million barrels per day to 108.3 million bpd. The organisation cited the potential need to replenish inventories depleted during the Middle East conflict, adding another factor to the market’s assessment of future demand and supply balances.
For Nigeria’s downstream market, sustained crude prices above $100 per barrel could increase the cost of imported petroleum products and influence replacement costs for marketers, depending on refined-product prices, freight, insurance, exchange rates and other landing-cost components. However, crude oil movements alone do not determine domestic petrol and diesel prices, particularly as local refining and supply arrangements also shape market conditions.