WTI Oil climbs above $99 as Middle East war threatens to become more complicated

• A 1.9% rebound takes WTI oil above $99.00 to session highs on Thursday.
• Crude prices have gained as fresh attacks on Saudi oilfields fuel fears of a further escalation in the conflict.
• Wednesday’s EIA figures showed a much larger decline than expected in US crude oil stocks last week.

A gain of about 1.9% so far on Thursday has lifted the US benchmark West Texas Intermediate (WTI) oil above $99.00. The strong rebound in oil prices comes as a deteriorating outlook for the Middle East conflict revives concerns over supply restrictions, with Iran issuing fresh threats against the US military and speculation growing that Israel might re-enter the conflict.

Earlier on Thursday, the navy of the Iranian Islamic Revolutionary Guard Corps (IRGC) stated that US bases in the region might face attacks if Washington continued to insist on sending vessels through the Strait of Hormuz along routes deemed illegal.

According to the IRGC, its forces also struck four vessels involved in illegal oil transfers in the Persian Gulf. It added that three other vessels had hit sea mines while trying to pass through the Hormuz sea corridor.

Fresh attacks sustain threat to Saudi oilfields

The statements came after another drone attack on Aramco’s Shaybah Oilfield by the Yemeni Houthi militias, a close ally of Tehran. The attack reportedly killed two people, renewing worries about disruptions to Saudi oil supplies.

Adding to those concerns, The New York Times reported, citing US officials, that the US and Israel might be preparing another round of major airstrikes against Iran after the US mid-term elections. The reported aim would be to force Tehran to make concessions in negotiations. 

A 3.1 million-barrel decline in commercial oil inventories in the week ending 16 October was reported by the US Energy Information Administration (EIA) on Wednesday. The drawdown was substantially larger than the 800K barrels forecast by market analysts, lending further support to prices.