Key Highlights

  • Brent crude futures rose 0.7 percent to USD 114.68 a barrel, and US benchmark West Texas Intermediate gained 1.42 percent.
  • Houthis said they struck Saudi Arabia's Ras Tanura refinery with a ballistic missile, though Saudi officials had not confirmed damage.
  • President Trump said any end to the Iran war comes on his terms, with Tehran barred from acquiring nuclear weapons.
  • Israel's election produced no clear winner, clouding the outlook for Israeli policy toward Iran as coalition talks loom.

Prices Climb Back on a Refinery Claim

Oil prices rose on Wednesday as investors weighed the prospect of a prolonged and widening conflict in the Middle East after the Houthis said they had attacked Saudi Arabia's largest refinery. Brent crude futures gained 0.7 percent to USD 114.68 a barrel, while US West Texas Intermediate futures rose 1.42 percent to USD 101.32.

The move recovers part of Tuesday's slide, when both benchmarks lost close to USD 2 a barrel as diplomatic contacts raised hopes of progress in regional talks. Brent is still up more than 11 percent over the past month.

What the Houthis Say They Hit

The Iran-backed Houthis said on Tuesday that they struck the Ras Tanura refinery in Saudi Arabia's Eastern Province with a ballistic missile. A Houthi spokesperson said the strike caused large fires. At the time of the reports, Saudi authorities had not confirmed a hit, and no interruption to operations had been independently verified.

Ras Tanura pairs a refinery with processing capacity of about 550,000 barrels per day with a major export terminal on the Persian Gulf. Reports earlier this month said Houthi forces hit an administrative building at Saudi Aramco's headquarters in Dhahran.

A Risk Premium Already Embedded

Concerns over disruption to oil flows have kept a geopolitical risk premium in crude prices, and traders are closely watching developments across the region. Saudi Arabia's oil infrastructure has taken on added importance as shipping through the Strait of Hormuz, the passage for roughly one-fifth of world oil supply, faces severe disruption.

Aramco's output in August was its lowest for any month since 1990.

Trump Sets Terms on Iran

Speaking at a campaign rally in Texas on Tuesday, President Donald Trump said the war with Iran ends on his terms and that any agreement must ensure Tehran never obtains a nuclear weapon. He described a swift conclusion to the conflict as achievable.

His remarks followed earlier comments that he was weighing a deal with Tehran against further military action. That left investors alert to the possibility of renewed strikes.

Israel's Vote Adds Uncertainty

Israel's election pointed to a political stalemate. Exit polls showed neither Prime Minister Benjamin Netanyahu's bloc nor that of challenger Gadi Eisenkot reaching the 61 seats needed to control the 120-member Knesset. That sets up protracted coalition negotiations and clouds the outlook for Israel's approach toward Iran.

With about 70.7 percent of ballots counted, Israeli media projected 54 seats for Netanyahu's bloc and 47 for Eisenkot's. After the vote, Netanyahu raised the prospect of renewed joint military action against Iran with Trump. Official results are due on November 4.

Markers to Follow

Any Saudi statement on Ras Tanura operations, weekly US crude inventory data, the next OPEC+ meeting on Sunday and the final Israeli results frame the near-term calendar. A survey of analysts pointed to a build of about 15,000 barrels in US crude stockpiles for the week ended October 23. Trump's choice between a deal and further military action is the other marker in focus.