Oil market rises on Middle East supply concerns

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Oil market rises on supply concerns

Highlights

Brent crude rises 0.78% to $109.64 and WTI gains 0.78% to $98.58 amid heightened Middle East supply risks after a supertanker incident.
At least 18 vessel attacks in two weeks, including Houthi strikes on Saudi Aramco and strategic sites, increase threats to key oil shipping routes.
U.S. works with global refiners to address diesel shortage as analysts expect a 800,000-barrel drop in U.S. crude inventories for the week ended October 16.

Shipping threats and oil infrastructure risks

As reported by Reuters, Brent crude futures rise 85 cents, or 0.78%, to $109.64 a barrel by 0022 GMT, while U.S. West Texas Intermediate crude gains 76 cents, or 0.78%, to $98.58. Traders are reassessing supply risks after a supertanker catches fire south of the Strait of Hormuz after striking a sea mine while, according to Iranian media citing Iran's Revolutionary Guards Navy, violating Iranian regulations.

Shiptracker Kpler says at least 18 vessel attacks are reported over two weeks, underlining mounting risks to maritime flows in the region. LSEG analysts say tanker attacks are expanding beyond the Strait of Hormuz, with vessels targeted as far south as the Gulf of Oman, raising concerns over cargo loadings and ship-to-ship transfers that support Middle East exports.

The Houthis claim responsibility for attacks on a Saudi Aramco site in Yanbu, the Shaybah oilfield, and the airports in Riyadh and Abha on Monday. The death toll from a Houthi attack on Yemeni government forces also rises to 73 as fighting intensifies, adding to concerns that the conflict is widening across strategic energy corridors.

Market reaction and supply outlook

Oil had fallen in the previous session after Iran's president discussed mediation efforts with Pakistan's army chief in Tehran, briefly easing fears of further escalation. On Tuesday, Brent settles down 76 cents, or 0.69%, at $108.79 after touching a five-month high of $111.99, while the expiring November WTI contract settles down $1.87, or 1.8%, at $101.79.

Iranian Foreign Minister Abbas Araqchi says in a television interview aired Tuesday that Tehran has not received a response from Saudi Arabia or Yemen's Houthis to its offer to help broker peace talks. That leaves diplomatic progress uncertain as traders continue to price in the risk of supply disruption.

In the U.S., two Energy Department officials say they are working with refiners around the world to raise fuel output as a diesel shortage lifts prices. A Reuters poll of eight analysts also shows expectations that U.S. crude inventories fell by about 800,000 barrels in the week ended October 16, alongside declines in product stockpiles.

Our earlier report on Strait of Hormuz shipping disruptions explained that prolonged interference with maritime flows was starting to hit agriculture through delayed fertilizer deliveries, higher fuel and transport costs, and more cautious planting decisions. We also noted that these pressures were already lifting agricultural commodity prices and increasing food security risks in import-dependent regions across Asia and Africa if logistics constraints persisted.

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