Oil futures advanced Wednesday as geopolitical tensions in the Middle East offset supply gains, with international benchmark Brent crude for December delivery rising 0.93% to $101.52 a barrel and U.S. West Texas Intermediate for November climbing 0.81% to $90.16 per barrel.
Saudi Arabia's East-West Pipeline had restored flow to 5.8 million barrels as of Tuesday morning, according to Saudi Energy Minister Prince Abdulaziz bin Salman. The recovery in physical supply, however, faced headwinds from renewed security concerns in the region.
Yemen's Iran-backed Houthis conducted attacks on Saudi Arabian targets Tuesday. The Saudi aviation authority reported that airports in Jazan and Najran came under fire. Traders cited the risk of further crude supply disruptions from such strikes, particularly given the Houthis' demonstrated ability to strike oil facilities hundreds of kilometers from the Yemen-Saudi border.
Iran has also stepped up attacks on tankers transiting the Strait of Hormuz, a critical chokepoint for global oil exports. That activity renewed worries among traders over potential disruptions to the nascent rebound in shipments through the waterway.
Naeem Aslam, chief investment officer of Zaye Capital Markets, said Tuesday that oil remains "caught between improving physical supply and persistent geopolitical risk."
Samer Hasn, senior market analyst at XS.com, characterized the threat as substantial. "The sustained ability of the Houthis in Yemen to target oil facilities hundreds of kilometers from the border keeps the risks of a renewed large-scale crude supply disruption present and high, and these risks could worsen if the Houthis feel the need to apply more pressure as a result of losing more territory," he said Tuesday.