Crude Oil Futures Rise Following Reported Houthi Attack on Saudi Refinery

Crude oil futures traded higher on Wednesday morning following reports of an attack by the Houthis on a refinery in Saudi Arabia.

At 10:03 am on Wednesday, December Brent oil futures stood at $115.52, recording an increase of 1.40 per cent. Concurrently, December crude oil futures on West Texas Intermediate (WTI) reached $101.36, up by 1.46 per cent. Domestic markets reflected a similar trend during the initial hours of trading on the Multi Commodity Exchange (MCX). November crude oil futures traded at ₹9,663 compared to the previous close of ₹9,498, marking a 1.74 per cent increase, while December futures traded at ₹9,546 against the previous close of ₹9,386, up by 1.70 per cent.

According to market reports, the Houthis conducted a strike on the Ras Tanura refinery in Saudi Arabia, which caused a fire at the refinery complex. However, there was no immediate confirmation regarding the incident from Saudi authorities. Previous attacks by the Houthis in the region have targeted pumping stations along the East-West oil pipeline as well as the King Khalid International Airport.

In their commodities feed for Wednesday, Warren Patterson, Head of Commodities Strategy at ING Think, and Ewa Manthey, Commodities Strategist, noted that oil prices had edged lower on Tuesday, settling down for a second consecutive day. Despite this, Brent continued to trade around $114 a barrel, keeping oil prices elevated as markets await clarity on potential developments involving US policy toward Iran. The broader upward trend in recent weeks indicates that the market is pricing in a higher likelihood of re-escalation.

Patterson and Manthey also cited reports that the US administration has proposed the return of US oil majors to Russia post-war, as part of broader negotiations aimed at ending the Russia-Ukraine conflict. Additionally, diplomatic contacts involving European leaders and the Russian President took place recently, signaling increased European involvement in peace negotiations, although no formal breakthroughs have been reported.

Other commodities traded on domestic exchanges showed mixed movements during the session. November natural gas futures on the MCX traded at ₹292.60 during the initial hour, up 1.46 per cent from the previous close of ₹288.40. On the National Commodities and Derivatives Exchange (NCDEX), December dhaniya contracts traded lower at ₹15,938 compared to the previous close of ₹16,134, down by 1.21 per cent. Similarly, December turmeric (farmer polished) futures on the NCDEX traded at ₹26,298, registering a decrease of 2.54 per cent from the previous close of ₹26,984.

"Geopolitical tensions in the Middle East continue to directly impact global energy markets, creating immediate price volatility for crude oil and related commodities. For businesses and startups operating in energy-dependent sectors, such fluctuations underline the necessity of maintaining robust supply chain strategies and adaptive financial planning to navigate rising operational costs effectively." — Dr. Shishir Gupta, Founder & CEO, StartupLanes