Oil prices gained more than $1 on Wednesday, with Brent crude rising $1.59, or 1.5 percent, to $110.38 a barrel as of 0350 GMT and US West Texas Intermediate up $1.36, or 1.4 percent, to $99.18, as escalating Middle East tensions fuelled fears of supply disruptions and falling US inventories lent support, Reuters reported. The rise reversed part of the previous session's fall, which had come after Iran's president discussed mediation efforts in a meeting with Pakistan's army chief in Tehran — though Brent had touched a five-month high before easing. Underneath the daily swing sit the facts that have kept crude elevated for two weeks: no movement toward a US–Iran deal, a widening map of attacks on shipping, and claimed Houthi strikes on Saudi energy infrastructure.
Why did oil rise on Wednesday?
Reuters gave two drivers. The first is fear: escalating Middle East tensions and the risk they pose to supply. The second is arithmetic: US crude and product inventories are falling, and market sources citing American Petroleum Institute data said US crude stocks fell by 4.9 million barrels in the week ended October 16. Suvro Sarkar, head of energy research at DBS, captured the market's mood: "Oil prices have been having a bit of wild ride in the last couple of sessions. We believe this is a mix of profit taking and optimistic hopes of a Qatar- or Pakistan-brokered deal, countered by the realisation that any deal is still very distant and compounded further by inventory data from the American Petroleum Institute, which shows drawdowns continuing in the US for both crude and products."
What happened to the mediation hopes that knocked prices down on Tuesday?
They ran into Tehran's stated position. Iran told Pakistan's army chief there would be no talks with Washington until its demands were met, Iranian media outlet Nournews reported on Tuesday, adding that a Qatari delegation had arrived in Tehran; Reuters noted there was no official confirmation of the reports. Separately, Iranian Foreign Minister Abbas Araqchi said in a television interview aired on Tuesday that Iran has not received a response from Saudi Arabia or Yemen's Houthis to its offer to help broker peace talks between them. In the United States, two Energy Department officials said on Tuesday they were working with refiners around the world to boost fuel output, as a diesel shortage has raised prices.
What is holding the risk premium in place?
Three things, all of them in Wednesday's reporting. First, the diplomacy is stalled in both directions at once: Tehran says there will be no talks with Washington until its demands are met, and Tehran also says its own offer to mediate the Saudi–Houthi fighting has received no answer from either side. Second, the physical risk to shipping is growing in area, not just in count — 18 vessel attacks in two weeks by Kpler's count, and LSEG's warning that the targeting now reaches into the Gulf of Oman, beyond the strait whose name has defined the risk until now. Third, inventories are tightening while the risk persists: a 4.9-million-barrel US crude drawdown in a single week is the kind of figure that leaves traders with less cushion against a supply shock, which is why Sarkar's summary paired the API data with the distance of any deal in the same sentence. In the United States, the pressure is visible at the product end as well: two Energy Department officials said on Tuesday they were working with refiners around the world to boost fuel output as a diesel shortage has raised prices.
How is the shipping risk widening?
Maritime security risks are escalating, Reuters reported. Ship tracker Kpler said on Monday that at least 18 vessel attacks were recorded 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 and jeopardising Gulf crude loadings and the ship-to-ship transfers that support regional loadings — an expansion of the danger zone from a single chokepoint to the open water beyond it. On land, the Houthis on Monday claimed responsibility for attacks on a Saudi Aramco site in Yanbu, the Shaybah oilfield and Saudi Arabia's Riyadh and Abha airports; those claims remain claims, unconfirmed by Saudi authorities in the reporting opened this week. The death toll from a Houthi attack on Yemeni government forces on Monday rose to 73 as fighting intensified, Reuters added. For oil traders, the combination is what holds the risk premium in place even on days when diplomacy flickers: the mediation stories move prices by dollars in a session, but the tanker count and Tehran's preconditions are what moved them back up by Wednesday morning.
This report is drawn from Reuters' October 21 oil report, opened and read in full via its verbatim carrier. Prices are the snapshots Reuters reported as of 0350 GMT on Wednesday, not live prices. The Houthis' claimed attacks on Saudi sites are published as claims, as Reuters reported them; the market figures above are reported as market reporting attributed them, and no causal claim beyond Reuters' own reporting is made.
