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Prices Rise as Diplomatic Withdrawals Follow Regional Attacks
Oil prices rose on Thursday (Oct. 22) following additional attacks by Yemen’s Iran-aligned Houthi rebels in Saudi Arabia, which prompted the United States to order some diplomats and their family members to leave its missions in the Kingdom.
Brent crude futures rose US$1.29, or 1.2 percent, to US$110.11 a barrel at 0034 GMT. US West Texas Intermediate (WTI) crude gained US$0.97, or 1 percent, to US$98.12. Brent had settled largely unchanged on Wednesday, while WTI had eased US$0.67.
The US State Department plans to withdraw family members from a number of other US missions in the region, according to US officials told to Reuters.
On Wednesday, Houthi forces struck several targets in Saudi Arabia. At least one person was killed and eight others were wounded at a civilian airport in Dammam. Two people were also killed in a separate drone attack on a Saudi oil field.
Meanwhile, explosions were heard in Sirik in southern Iran, according to Iranian media reports on Wednesday. The reports stated that the nature and origin of the explosions were unknown.
Iran Warns Against Dialogue While Shipping Disruptions Mount
Iranian officials have signaled a hardening stance amid the escalating tensions. Iran’s Foreign Minister Abbas Araqchi told the Financial Times that Iran was fully prepared to defend itself. President Masoud Pezeshkian told state media that the US could not expect dialogue while blockading and threatening Iran.
The security situation has impacted maritime traffic in the region. Data from Kpler showed at least 18 attacks on shipping over the past two weeks. LSEG analysts warned that Iran was targeting tankers well beyond the Strait of Hormuz, reaching into the Gulf of Oman. This activity is jeopardizing Gulf crude loadings and ship-to-ship transfers supporting regional loadings.
US Stockpiles Drop Sharply as Energy Department Acts
Domestic energy reserves faced significant pressure last week, with US crude stocks falling by 3.06 million barrels to 412.5 million barrels, according to the US Energy Information Administration (EIA) data released on Wednesday. This draw was substantially larger than analysts’ expectations in a Reuters poll, which had forecasted an 820,000-barrel decline.
Distillate stockpiles, which include diesel and heating oil, rose 1.68 million barrels in the week to 104.3 million barrels, versus expectations for a 1.16 million-barrel drop, EIA data showed.
In response to the surge in prices driven by diesel shortages due to the wars in Iran and Ukraine, the Trump administration is offering to loan up to nearly a third of the one million-barrel US emergency heating oil reserve, the Department of Energy said on Wednesday.
Geopolitical Shifts in Eastern Europe
While tensions escalated in the Middle East, diplomatic efforts continued elsewhere. Russian President Vladimir Putin hosted US Special Envoy Steve Witkoff in St Petersburg on Wednesday for talks on ending the war in Ukraine amid Washington’s latest push to stop Europe’s bloodiest conflict since World War II.
The Kremlin said Putin had agreed to resume US-mediated peace talks with Ukraine as soon as November. Ukrainian President Volodymyr Zelenskiy said he supported the talks and hoped they would start as soon as possible.
