Oil retreats as traders weigh Mideast attacks, IEA report

Oil prices rose on Wednesday, Oct. 14, after Yemen's Houthis struck the Dhahran headquarters of Saudi Aramco and Iranian officials said Tehran was using new tactics against ships in the Strait of Hormuz. Brent crude futures settled up 37 cents at $106.06 a barrel, and U.S. West Texas Intermediate gained 95 cents to $95.09, a three-week high, Reuters reported.gvwire.com

Supply has only recently climbed back toward pre-war levels, and the new attacks put that recovery at risk. "We're seeing a lot of fear trade today," said Phil Flynn, senior analyst at the Price Futures Group, according to Reuters. The gains did not last: Brent and WTI both fell in early trading on Thursday as traders weighed the attacks against the International Energy Agency's latest monthly report, CNBC Comcast Corporation ↗ 0.60% reported.finance.yahoo.com+1

Strike on Aramco

Saudi Arabia's energy ministry said a missile hit an administrative building at Aramco's Dhahran complex late Tuesday, causing a "limited fire" but no casualties, the BBC reported. Two regional officials told the Associated Press that the strike damaged the building's top three floors, including the offices of the chief executive and other senior officials. Sources told Reuters that operations continued normally, with staff working from home. The Houthis promised more attacks on Saudi airports and oil facilities. Houthi military spokesman Yahya Saree said operations "will continue in the coming days," AFP reported.apnews.com+3

Ships sink near Hormuz

Two senior Iranian officials told Reuters that Iran is using new tactics against vessels in the strait to keep oil prices high and influence the U.S. midterm elections, Al Jazeera reported. A U.S. military official said Iran's Revolutionary Guards had started using unarmed spotters in small boats to find targets.aljazeera.com

Two cargo ships sank near the strait within 24 hours, CNN reported. The first was the Singapore-flagged container ship GFS Pride. Its 21 crew members were evacuated safely. The second was the Antigua and Barbuda-flagged Cape Dao, which had been hit on Sept. 23. One of its crew members was killed in that strike, according to Reuters. Iran's Revolutionary Guards said a container ship hit a naval mine. Experts doubted that account and said a drone attack was more likely, CNN reported.edition.cnn.com+1

Tight market

Brent has risen more than 70% this year during the U.S.-Iran war, Bloomberg reported. The IEA said global observed inventories are 509 million barrels below pre-conflict levels. It also said crude exports from Gulf producers recovered to about 75% of pre-war levels in September, according to Reuters.finance.yahoo.com+1

"If new attacks on oil infrastructure in the Middle East further disrupt petroleum supply in an already very tight physical market, energy costs and inflation would move even higher," said Bart Melek of TD Securities, Bloomberg reported.finance.yahoo.com