Crude oil rebounded after a one-day dip as escalating Houthi attacks on Saudi Arabia and a developing Gulf of Mexico storm revived supply-risk premiums. The gains came even as Middle Eastern crude exports have been improving, with the market now caught between recovering flows and fresh disruption threats.
Houthi attacks widen the Saudi front
Iran-aligned Houthi militants in Yemen claimed new strikes on Saudi Arabia, saying they launched ballistic missiles and drones at King Khalid International Airport in Riyadh. The group also said it hit Abha airport, an air base in Khamis Mushait, and two military bases near the Yemen border, though it offered no evidence for the claims.
A spokesperson for Saudi-led coalition forces said they intercepted a ballistic missile north of Riyadh. The escalation follows a Saudi-led offensive aimed at retaking territory near the Bab el-Mandeb Strait, a route Saudi Arabia relies on after Iran's closure of the nearby Strait of Hormuz already curbed regular export lanes. Roughly 12% of global trade moves through Bab el-Mandeb, while about a fifth of the world's oil and liquefied natural gas passed through Hormuz before the US-Israeli assault on Iran began in late February.
A Gulf storm adds a second supply threat
A storm building in the Gulf of Mexico is also threatening US oil and gas production and refining capacity, prompting precautionary shutdowns. Reuters estimates facilities accounting for around 15% of US crude output and 5% of natural-gas production could be affected, with several refineries also at risk.
As a result, crude erased almost all of the week's losses after dipping toward the lower bound of its rising price channel. Middle Eastern flows have recovered significantly, but attacks on infrastructure and shipping keep threatening the reliability of those supplies.
Fed minutes land as oil keeps inflation in focus
Talks between the US and Iran remain stalled: Tehran has made reopening the Strait of Hormuz conditional on US concessions, while Washington is pressing for cuts to Iran's nuclear enrichment capacity. Until the negotiations move or Hormuz reopens, the market is likely to hold a sizeable geopolitical and supply-risk premium, keeping pressure on inflation readings that have already pushed the Federal Reserve toward further rate hikes. Minutes from the Fed's September meeting, when policymakers raised borrowing costs for the first time since 2023, are due later Wednesday.
Sources: Investing.com/AP, InvestingLive
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