Oil rises on Middle East supply fears, US inventory drawdowns

Brent crude futures rise $1.59, or 1.5%, to $110.38 per barrel

Oil prices gained over $1 on Wednesday as escalating Middle East tensions fuelled fears of supply disruptions, while falling US crude and product inventories lent support to the market.

Brent crude futures rose $1.59, or 1.5%, to $110.38 per barrel. US West ​Texas Intermediate (WTI) crude gained $1.36, or 1.4%, to $99.18 per barrel.

Prices fell in the previous trading session after ​Iran's president discussed mediation efforts in a meeting with Chief of Defence Forces and Army Chief Field Marshal Syed Asim Munir in Tehran, though ⁠Brent hit a five-month high before easing.

"Oil prices have been having a bit of a wild ride in ​the last couple of sessions," said Suvro Sarkar, head of energy research at DBS.

"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 (API), which shows drawdowns continuing in the US ​for both crude and products."

Iran told CDF Munir 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. There was ‌no official ⁠confirmation of the reports.

Maritime security risks are also escalating. Shiptracker Kpler said on Monday that at least 18 vessel attacks were recorded over the past two weeks, while LSEG analysts warned 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 supporting regional loadings.

Read: Pak-Iran border reopens as CDF visits Tehran

In Saudi ​Arabia, 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.

The death toll from a Houthi attack on ​Yemeni government forces on Monday rose to 73 as fighting intensified.

Iranian Foreign Minister Abbas ​Araghchi 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.

In the US, 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.

According to market sources citing API data, US crude stocks fell by 4.9 million barrels in the week ended October ​16.