Saudi Refinery Threat Pushes Oil Back Over $115 Amid Supply Worries
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(Oil & Gas 360) – Crude futures advanced on Wednesday, October 28, driven by fresh attacks on Saudi Arabian energy facilities that offset ongoing diplomatic attempts to ease Middle East tensions, escalating anxieties over global crude output, refining capabilities, and maritime transportation safety.
Brent crude gained $2.02, or 1.8%, reaching $115.90 per barrel by 0735 GMT, while U.S. West Texas Intermediate traded up $2.01, or 2%, at $101.91 per barrel. This price rally reversed Tuesday’s losses, which had been driven by brief optimism that diplomatic negotiations would lower geopolitical risk premiums.
The Iran-backed Houthi group in Yemen asserted responsibility for a missile strike aimed at Saudi Arabia’s Ras Tanura refinery, a critical hub capable of refining nearly 550,000 barrels daily. Saudi officials have yet to confirm the incident, and no independent details regarding structural damage or operational downtime have been established.
This reported attack comes on the heels of targeted strikes against Riyadh’s international airport and pumping stations along the Saudi East-West pipeline. The pipeline serves as a strategic bypass, enabling Saudi crude to access Red Sea export terminals without transiting the vulnerable Strait of Hormuz.
Ongoing risks to both maritime routes and inland bypass routes are hampering efforts to stabilize international petroleum shipments after months of regional instability.
Delegates from Saudi Arabia, Turkey, and Pakistan conferred with Iranian representatives in Tehran earlier this week, pledging to pursue further talks on regional stability. Nevertheless, persistent military actions have dampened market expectations for a swift diplomatic resolution that would secure oil transit routes.
Data from ANZ Research indicates that crude shipments from the Persian Gulf have fallen for four straight weeks, with transit volume through the Strait of Hormuz recently hovering at roughly 60% of standard levels. Concurrently, global distillate stockpiles were running nearly 5% under their five-year seasonal average.
Prices drew further momentum from weekly U.S. petroleum data. The American Petroleum Institute indicated a 2.03 million-barrel drawdown in domestic crude inventories for the week ending October 23, defying analyst forecasts of a build. Official statistics from the Energy Information Administration are due later Wednesday.
Higher oil prices bolster cash flows and expand short-term profit margins for upstream energy firms. Nonetheless, ongoing logistics hurdles and rising marine insurance costs threaten to erode these gains, especially for export-dependent operators.
Downstream processors face distinct headwinds, as potential crude supply cuts, unpredictable feedstock expenses, and low diesel inventories generate substantial swings in crack spreads.
Maintaining the integrity of the Saudi East-West pipeline remains paramount, as alternative overland channels grow increasingly vital whenever Persian Gulf tanker traffic faces severe constraints.
Traders are concurrently focused on the scheduled OPEC+ conference, where member nations are anticipated to keep December production targets unchanged. However, physical export capabilities and real supply availability carry far greater weight than formal output targets during periods of active transit disruption.
Near-term crude price movements will hinge on whether peace talks can yield tangible security improvements, whether facility strikes result in confirmed supply losses, and how quickly regional shipping lines can normalize.
The recent price surge underscores that energy markets remain acutely reactive to physical threats against key oil infrastructure, regardless of concurrent peace initiatives.
Disclaimer
This informational, opinion, and insights article is provided for informational purposes only and does not constitute investment, legal, or financial advice. The views expressed are based on publicly available information and market conditions at the time of publication and are subject to change without notice.
