Oil Prices Rebound as Houthi Attacks on Saudi Arabia Reignite Supply Fears

Oil prices rose in Asian trading on Wednesday, reversing two days of declines as renewed attacks by Yemen's Houthi movement on Saudi Arabian energy infrastructure overshadowed recent diplomatic efforts and reignited concerns over Middle East supply security.

As of 21:20 ET (01:20 GMT), key benchmarks posted solid gains:

• Brent crude futures for December delivery rose 1.5% to $115.60 per barrel.
• West Texas Intermediate (WTI) crude futures gained 1.2% to $101.13 per barrel.

Geopolitical Tensions Escalate

The rally followed a Houthi announcement on Tuesday that they had targeted Saudi Arabia's Ras Tanura oil refinery, the kingdom's largest, with a ballistic missile. The group also claimed responsibility for earlier attacks on pumping stations along the East-West pipeline, a critical route that allows crude to bypass the Strait of Hormuz.

These developments have heightened investor anxiety about the vulnerability of energy facilities in the region. The attacks threaten to undermine progress from diplomatic talks held in Tehran on Monday between Iranian officials and representatives from Saudi Arabia, Turkey, and Pakistan, which Iranian state media reported were aimed at strengthening peace and security.

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Surprise U.S. Inventory Draw

Adding upward pressure to prices, industry data released Tuesday pointed to tightening U.S. supply. The American Petroleum Institute (API) reported that U.S. crude oil inventories fell by 2.03 million barrels for the week ended October 23.

This drawdown contrasted sharply with market expectations for an increase of 800,000 barrels. However, the API report also showed a build in fuel stockpiles, with gasoline inventories rising by 2.39 million barrels and distillate stocks increasing by 380,000 barrels. Investors now await official data from the U.S. Energy Information Administration (EIA) due later on Wednesday for confirmation.

Market Focus Shifts to Fed, EIA Data

Looking ahead, market participants are closely watching the U.S. Federal Reserve's policy decision on Wednesday for signals on the economic outlook, which could influence future fuel demand. The combination of heightened geopolitical risk and shifting supply data has returned volatility to a market that had briefly pulled back from six-month highs set last week.