Oil prices climb as traders weigh Saudi supply risk, Russian diesel flow

Oil prices surged on Wednesday as traders evaluated the threat of supply disruption from the conflict between Yemen’s Houthis and Saudi Arabia, alongside hopes of a boost from higher Russian diesel exports. Brent crude futures increased 89 cents, or 0.8%, to $106.58 a barrel as of 0030 GMT, while US West Texas Intermediate crude futures jumped 80 cents, or 0.9%, to $94.94.

Brent had slipped 0.9% on Tuesday, while WTI rose 0.4%. Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, attributed the price rise to worries over the conflict spurring traders but noted that the expectation of increased Russian diesel shipments may curb extreme price fluctuations, projecting WTI to fluctuate between $90 and $100 a barrel.

The Houthis targeted an administrative building of Saudi Aramco in Dhahran, sparking a brief fire, according to Saudi Arabia’s energy ministry. The group has also launched ballistic missiles and drones at Saudi Arabia in retaliation for its support of Yemeni government forces. The attacks have extended to Riyadh’s international airport, which has been struck four times, killing 13 individuals last Saturday.

Saudi Arabia raised oil output despite ongoing disruptions from the US-Iran war, resulting in a significant increase in production from OPEC+ — comprising of OPEC and Russia — on Tuesday. Iran is reportedly employing novel tactics to deter ships in the Strait of Hormuz to sustain high oil prices and sway the outcome of the US midterm elections.

Meanwhile, Russia insisted on Tuesday that it sees no direct connection between peace negotiations with Ukraine and its deal to export diesel to the US. This assertion came after Reuters reported that US envoys had informed Ukrainian officials on Friday that the agreement was part of an effort to entice Russia back to peace negotiations.