Oil rises as Houthi attack fears on Saudi Arabia outweigh supply recovery

• Yemen's Iran-backed Houthis attacked Saudi airports in Jazan and Najran, escalating hostilities with the kingdom and raising fears of further supply disruptions
• Saudi Arabia's East-West Pipeline had restored oil flow to 5.8 million barrels as of Tuesday, indicating supply recovery in the region
• Analysts warn that Houthis' ability to target oil facilities hundreds of kilometers away maintains high risk of large-scale crude supply disruptions, particularly if they lose more territory

Oil Prices Rise on Saudi Attack Concerns Despite Supply Recovery

Market Movement:

Oil prices advanced Wednesday amid escalating Middle East tensions. Brent crude futures for December delivery rose 1.17% to $101.76 per barrel, while U.S. WTI crude for November increased 1.26% to $90.57 per barrel.

Key Development:

Yemen's Iran-backed Houthis launched attacks on Saudi Arabian airports in Jazan and Najran, raising concerns over potential crude supply disruptions from the region. These geopolitical risks overshadowed improving physical supply conditions in the Middle East.

Supply Context:

Saudi Energy Minister Prince Abdulaziz bin Salman reported that oil pumped through the East-West Pipeline reached 5.8 million barrels as of Tuesday morning, indicating recovery in crude flows. However, market sentiment remains dominated by security concerns.

Market Implications:

Analysts note oil markets are caught between two competing forces: improving physical supply and persistent geopolitical risk. The Houthis' demonstrated capability to strike oil facilities hundreds of kilometers from Yemen's border maintains elevated risk of large-scale supply disruptions.

According to Samer Hasn of XS.com, these risks "could worsen if the Houthis feel the need to apply more pressure as a result of losing more territory," suggesting potential for further escalation.

Outlook:

The sustained attacks highlight vulnerability of critical Middle East energy infrastructure despite supply improvements. Traders are pricing in geopolitical risk premium, with concerns that hostilities between the Houthis and Saudi Arabia could intensify and threaten broader regional crude flows. The situation underscores ongoing volatility in energy markets tied to Middle East security dynamics.