Oil prices rise as storms and air strikes threaten supply

PERTH, Oct 7 : Oil prices rose on Wednesday as the market weighed supply constraints from a storm heading for US oil-producing regions and attacks by Yemen's Iran-backed Houthis on Saudi Arabia against increased supplies of Middle East crude. 

Brent futures rose 93 cents, or 0.92 per cent, to $101.51 a barrel by 0022 GMT. US West Texas Intermediate (WTI) crude rose 82 cents, or 0.92 per cent, to $90.25.

US forecasters said on Tuesday a storm forming in the Gulf of Mexico would become the first Atlantic hurricane of 2026 within two days and would likely hit oil and gas producing facilities. 

The offshore areas in the Gulf in the storm's path produce 15 per cent of US crude oil and 5 per cent of the country's natural gas.

KCM Trade chief analyst Tim Waterer said the storm was an “unwelcome complication for crude, raising the prospect of production and refining disruptions at a time when the market already has enough supply-side headaches”.

The storm could affect six refineries. 

Refineries in US Gulf states account for about 50 per cent of the national capacity of 18.2 million barrels per day (bpd).

US crude oil and gasoline inventories fell, while distillate stocks rose marginally last week, market sources said on Tuesday, citing data from the American Petroleum Institute.

Crude stocks fell by 2.09 million barrels in the week ended October 2. 

Supply had been rising as the East-West pipeline hit 5.8 million barrels a day, according to Saudi Energy Minister Prince Abdulaziz bin Salman on Tuesday. 

Around 12 million barrels per day of crude oil and 2 million bpd of refined products were leaving the Middle East on tankers in the last 7 to 10 days, the head of Vitol said. 

However, Saudi Arabia's airports in Jazan and Najran were targeted in two attacks on Monday evening, the Saudi aviation authority said, as hostilities between the kingdom and Yemen's Iran-backed Houthis escalated.

The attacks occurred as Saudi-backed Yemeni government forces pressed a major offensive to retake territory from the Houthis, after weeks of rebel advances, with Riyadh stepping up airstrikes in support of the campaign.

Attacks and refinery outages are “likely to keep the cracks elevated and scarcity will transmit to crude. Prices will stay elevated near a $100 level without any material de-escalation emerging,” said Mukesh Sahdev, chief oil analyst at X Analysts in Sydney. 

US-Iran relations are no closer to repair with US President Donald Trump saying on Tuesday that nobody knew who was running Iran during the eight-month US-Israeli war with Iran. 

"Their leaders are gone, their second group of leaders are gone, and the biggest problem I have is nobody knows who the hell is running the country," Trump said.

Iran's foreign ministry spokesman said on Sunday Washington knows very well who their counterpart is in Iran and how the decision-making system in Iran works.