Oil pares losses after reports Houthis attacked Saudi Aramco refinery

Oil prices retreated from their earlier sharp decline, falling less than 1 percent after plummeting over 3 percent on Thursday, as reports emerged that Yemen's Houthi rebels had targeted a Saudi Aramco refinery with drones, sparking concerns over potential supply disruptions in an already constrained global market. According to the Iran-aligned group's Saba news agency, the Houthis launched an attack on an Aramco refinery in Saudi Arabia's Jazan using two drones on Thursday.

A Houthi military source claimed the assault was retaliation for what the group alleged were Saudi violations of Yemeni airspace and sovereignty in the Saada and Hajjah provinces.

In response to the reported attack, Brent futures decreased by 74 cents, or 0.8 percent, to USD88.24 a barrel, while US West Texas Intermediate (WTI) crude slipped 77 cents, or 0.8 percent, to USD82.56. Earlier in the trading session, both contracts had plunged more than 3.5 percent as investors weighed weaker global demand expectations against a deadlock in US-Iran talks. Reports of the Yemeni attacks also pushed diesel crack prices to a record high.

However, the market's renewed focus on potential supply disruptions was tempered by data from the US Energy Information Administration (EIA), published on Wednesday, which revealed a significant weekly increase in US commercial crude oil inventories. Crude inventories rose by 17.4 million barrels to 424.4 million barrels in the week ending August 7, marking the highest level since June 5, according to the EIA.

Meanwhile, OPEC lowered its global oil demand growth forecast for 2026 to 580,000 barrels per day in its monthly oil market report, and the International Energy Agency (IEA) predicted a decline of 1.6 million barrels per day in consumption this year, compared to a previous forecast of 1 million bpd, citing higher prices and supply constraints stemming from the US-Israeli conflict with Iran.