Oil Prices Climb as Traders Weigh Saudi Supply Risk, Russian Diesel Flow

Oil benchmarks moved higher early Wednesday. Brent crude futures rose 89 cents, or 0.8%, to $106.58 a barrel by 0030 GMT, while U.S. West Texas Intermediate gained 80 cents, or 0.9%, to $94.94. The gains followed a mixed Tuesday session in which Brent slipped 0.9% and WTI added 0.4%.

Saudi Arabia's energy ministry said Houthi forces attacked an administrative building belonging to state oil company Saudi Aramco in Dhahran, causing a limited fire. The Houthis have launched ballistic missiles and drones at the kingdom over the past week in retaliation for Saudi support of Yemeni government forces. Riyadh's international airport has been struck four times, including a Saturday attack that killed 13 people.

Traders are weighing that supply risk against the possibility of more Russian diesel reaching global markets. Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said the Houthi-Saudi conflict is pushing prices up. He added that expectations for increased Russian diesel exports could ease market tightness and limit sharp moves, projecting WTI to trade between $90 and $100 a barrel.

The price moves come as OPEC said Tuesday that Saudi Arabia increased oil production last month despite shipment disruptions caused by the US-Iran war. That helped drive a sharp production increase from OPEC+, which includes Russia and other partners. Separately, two senior Iranian officials told Reuters that Iran is deploying new tactics to target ships in the Strait of Hormuz to keep oil prices high and influence US midterm elections.

In Russia, the government said Tuesday it sees no direct link between peace talks with Ukraine and its diesel export deal with the US. Reuters reported that US envoys told Ukrainian officials on Friday the deal was part of an effort to draw Russia back into negotiations for a peace settlement. Traders will continue monitoring Middle East supply risks and Russian fuel flows for direction.