Houthis target Saudi Aramco compound, limited fire reported

Oil prices surged on Wednesday as traders assessed the risk of supply interruptions from intensifying assaults by Iran-backed Houthi rebels on Saudi Arabia against forecasts of heightened Russian diesel deliveries reducing market tightness. Brent crude futures surged 89 cents, or 0.8%, to $106.58 per barrel by 0030 GMT, while US West Texas Intermediate crude futures climbed 80 cents, or 0.9%, to $94.94. Brent had slipped 0.9% the previous day, while WTI increased 0.4%.

Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, told Reuters that the "supply concern stemming from conflict between the Houthis and Saudi Arabia is driving prices higher." He added that expectations of increased Russian diesel exports could temper sharp price swings either way.

The Saudi Arabian energy ministry reported that the Houthis targeted an administrative building belonging to state-owned oil company Saudi Aramco in Dhahran, resulting in a minor fire. The group has launched ballistic missiles and drones at the kingdom over the past week in response to Riyadh's support for Yemeni government forces.

President Donald Trump blamed the Houthis for intentionally boosting oil prices ahead of the US midterm elections. In a post on Truth Social, he alleged the group had re-emerged, possibly with Iranian backing, and cautioned he would not forget the attacks after the elections. Trump also hinted at escalating US military action in the Middle East following the November elections, which will determine whether Republicans maintain control of the House of Representatives and Senate.

Saudi Arabia escalated oil output last month despite delivery disruptions stemming from the US-Iran war, contributing to a substantial output increase from OPEC+, the oil producers' alliance, according to Reuters data. Iran is also employing novel tactics to target ships in the Strait of Hormuz to maintain high oil prices and sway the US midterm elections, according to two senior Iranian officials cited by Reuters.

A potential mitigating factor to supply worries, Russia asserted on Tuesday that it saw no direct correlation between peace talks with Ukraine and its agreement to export diesel to the US. This statement followed a report that US envoys had informed Ukrainian officials that the deal was unrelated to efforts to bring Moscow back to negotiations. Analysts anticipate that the conflicting pressures from regional strife and potential fuel supply rises will shape oil price movements in the coming days.