Oil rebounds after decline as claims emerge of attack on Saudi refinery with 550,000-barrel capacity
Key Facts
Oil prices rose on Wednesday, October 28, after falling nearly $2 the previous day, as claims of an attack on a Saudi refinery revived concerns about supply disruptions. Reuters said the Houthis announced they had targeted Saudi Arabia’s largest oil refinery, a facility with capacity of 550,000 barrels per day, but Saudi authorities did not immediately confirm the attack. At 04:35 GMT, Brent crude rose $1.59, or 1.4%, to $115.47 a barrel, while West Texas Intermediate gained $1.43, or 1.4%, to $101.33. EL7 closing data showed WTI ended October 28 at $101.35, compared with $99.90 the previous day, while Brent closed at $115.40, up from $113.88. These prices differ from an earlier trading snapshot on October 27, when WTI rose 40 cents, or 0.39%, to $102.16 at 09:18 GMT, after both benchmarks had fallen 1% earlier in the session.
Tuesday’s and Wednesday’s moves reflected the opposing effects of two forces on prices: Middle East talks initially eased supply concerns, then news of the Saudi refinery brought those concerns back to the fore. Reuters said prices fell nearly $2 on Tuesday as talks eased fears, before rebounding after claims of the attack. Saudi authorities did not immediately confirm the attack, leaving the Houthi announcement as part of the trading backdrop rather than an incident confirmed by Riyadh. On the same day, U.S. crude inventories were the subject of two conflicting estimates: market sources cited data from the American Petroleum Institute showing a decline of 2.03 million barrels in the week ended October 23. By contrast, analysts surveyed by Reuters estimated inventories rose by about 15,000 barrels in the same week. The official U.S. Energy Information Administration report was expected later on Wednesday, Reuters said.
The safety of transit through the Gulf remains a factor shaping the market’s sensitivity to any security development. The Associated Press said Iranian media reported that 7 oil tankers caught fire or were damaged by mines during the night of October 21 to 22, but said it could not independently confirm the account. Citing Lloyd’s List Intelligence, the agency reported 28 attacks on ships in October, the highest number since the war began, while the company said active operators in the Gulf showed few signs of withdrawing. The agency reported that tankers willing to take the risk were crossing the strait at night with their tracking systems and phones switched off, then transferring oil to other tankers in the Gulf of Oman. The strait holds exceptional weight in energy trade: the average flow of oil through it reached 20 million barrels per day in 2024, equivalent to about 20% of global petroleum liquids consumption, according to the U.S. Energy Information Administration.
October data from the International Energy Agency show that Gulf exports and flows through the strait recovered in September, despite continued reliance on alternative routes. Crude exports from Gulf producers, led by Saudi Arabia, rose by 4.4 million barrels per day to 13.9 million, exceeding 75% of pre-war levels. Oil flows through the Strait of Hormuz increased by 3.7 million barrels per day to 10.9 million, while exports that bypassed the strait via alternative routes rose by 970,000 barrels per day to 5.6 million. Global oil supply also rose by 2.5 million barrels per day month on month in September to 102.3 million barrels per day, driven by Gulf producers. Aramco CEO Amin Nasser said the East-West pipeline’s capacity had increased from 2 million barrels to 7 million barrels per day, bolstering Saudi Arabia’s ability to transport crude away from the Strait of Hormuz.
On inventories, the International Energy Agency said observed global oil stocks fell by 10 million barrels in September, as onshore inventories dropped by 113 million barrels, partly offset by an increase in oil in transit. At the end of the month, global inventories were 509 million barrels below their level at the end of February. These figures put the supply picture in the context of a market whose inventories have been under sustained pressure, while expectations for the subsequent path of demand and supply vary. The agency expects global oil demand to fall by an average of 2.6 million barrels per day in 2026 and decline by 2.5 million barrels per day year on year in the fourth quarter. On the supply side, it expects a decline of 5.8 million barrels per day to an average of 100.7 million barrels per day in 2026, before a rise of 7.7 million barrels per day in 2027.
On the diplomatic front, senior delegations from Saudi Arabia, Pakistan and Turkey met Iranian officials in Tehran in an effort to avoid a resumption of fighting, and participants agreed to continue dialogue on regional cooperation, peace and security, the Associated Press reported. The talks remain relevant to supply expectations: Reuters linked Tuesday’s price decline to the easing of market concerns before anxiety returned the following day. On OPEC+ production, Reuters cited the International Energy Agency as expecting the group to leave December production targets unchanged at the Sunday meeting following the report. It added that most of the seven core members were producing below their targets. These upcoming events, along with monitoring official confirmation about the refinery and U.S. inventory data, put supply and trading drivers at the center of the oil market’s focus in the days ahead.