Oil prices advanced on Tuesday, with Brent crude trading near five-month highs as markets factored in a geopolitical risk premium prompted by reported attacks on Gulf shipping and claimed Houthi strikes on Saudi energy facilities.
Brent crude futures gained 55 cents, or 0.50 percent, to trade at $110.10 a barrel by 06:19 a.m. Saudi time. The contract had climbed to $110.70 a barrel during the previous session, reaching its highest level since May 20. The expiring November contract for US West Texas Intermediate rose 0.24 percent to $103.91, while the more-active December contract advanced 39 cents, or 0.40 percent, to $98.93.
Yemen's Iran-aligned Houthis said on Monday that they launched strikes against Saudi energy, airport and military installations, naming an Aramco facility in Yanbu, the Shaybah oilfield, King Khalid International Airport in Riyadh and Abha airport as targets. Saudi authorities did not immediately confirm the claims.
Regional security concerns were further heightened on Monday after a Houthi attack on a government security forces training facility in Yemen's Shabwa province killed 58 people and wounded more than 200. Meanwhile, shiptracker Kpler noted that at least 18 vessels had reportedly been attacked over a two-week period, sustaining the market's risk premium.
“Oil prices remain well-supported ... This suggests the market is pricing in a significant risk premium, given the situation's volatility,” ING analysts said in a note.
In the United States, crude stockpiles and refined product inventories were anticipated to have dropped last week. On Friday, an executive order from President Donald Trump waived key Russia-related US sanctions and tariffs, including goods duties and penalties on purchasing its energy. However, Trump stated on Saturday that he had not yet announced a final decision, while Secretary of State Marco Rubio said officials sought more time to review the matter.
Data from the International Energy Agency showed Russian crude oil output rose by 65,000 barrels per day in September to 8.43 million bpd, though production stood roughly 870,000 bpd below levels recorded a year earlier. Tim Waterer, chief analyst at KCM Trade, said: “While the prospect of additional Russian diesel supply offers some theoretical relief, traders appear far more focused on the ongoing risk of further damage to energy infrastructure across the Gulf region.”
