Oil prices rose Wednesday as traders weighed persistent Middle East supply risks after an attack on a Saudi Aramco building and fresh strikes on tankers around the Strait of Hormuz.
December Brent crude futures rose 0.2% to $105.86 a barrel, while December West Texas Intermediate futures gained 1.3% to $94.36 a barrel. The gains followed a mixed session Tuesday, when Brent settled lower, while front-month U.S. crude edged higher.
Regional tensions remained elevated after Saudi Arabia's Energy Ministry said an Aramco administrative building in Dhahran, home to the company's headquarters, was targeted Tuesday evening, causing a limited fire but no casualties. Yemen's Iran-aligned Houthis took responsibility for the attack, The Wall Street Journal reported.
Iran is also fortifying its defenses and warning of a broader regional response to further U.S. strikes, The Wall Street Journal reported.
Shipping risks also remained elevated. U.K. Maritime Trade Operations reported another tanker strike in the Strait of Hormuz Tuesday, following a series of attacks on commercial vessels in recent weeks. Tanker shortages and elevated freight rates have also weighed on Gulf crude exports, which slowed in early October and weakened further last week, analysts at ANZ Research said.
Despite the continuing shipping risks, crude oil continued to flow through the waterway. U.S. Central Command said Tuesday that American forces had assisted Gulf partners in shipping more than 19 million barrels of crude through the Strait of Hormuz on Monday. The command also rejected an Iranian military claim that Tehran controlled the waterway.
In its latest monthly report Wednesday, the IEA said global oil supply increased by 2.5 million barrels a day to 102.3 million barrels a day in September, driven by higher output from Persian Gulf producers, particularly Saudi Arabia and the United Arab Emirates. However, Gulf crude exports remained below prewar levels, and renewed attacks on energy infrastructure and tankers threaten the recovery, the agency said.
The IEA also lowered its global oil-demand outlook, forecasting a decline of 2.6 million barrels a day this year to 102.4 million barrels a day, reflecting high energy prices and the economic fallout from the conflict. Despite weaker consumption, the agency expects oil markets to remain in deficit through the end of 2026, with tight diesel supplies likely to persist well into next year.
Elevated shipping costs are also influencing oil-price forecasts. Morgan Stanley raised its Brent forecast for the fourth quarter to $105 a barrel from $100, citing tight supplies, geopolitical risks and higher freight costs. The bank said shorter shipping distances to European markets favor Brent, while crude from Brazil, West Africa and the U.S. has become less competitive because of higher freight costs. It also raised its first-quarter 2027 Brent forecast to $100 a barrel from $95.
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