Houthi Attack on Saudi Aramco Refinery Fuels Oil Price Volatility

Oil prices pared losses to less than 1% after dropping more than 3% earlier on Thursday, following reports that Yemen's Houthis had targeted a Saudi Aramco refinery with drones. The Houthi attack was in response to what the group described as Saudi violations of Yemeni airspace and sovereignty in Saada and Hajjah provinces. Brent futures were down 74 cents, or 0.8%, at $88.24 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 77 cents, or 0.8%, at $82.56.

Data from the U.S. Energy Information Administration on Wednesday showed that U.S. commercial crude oil inventories made their largest weekly gain since January 2023 as exports slumped. Crude inventories rose by 17.4 million barrels to 424.4 million in the week ended August 7, their highest since June 5.

The International Energy Agency said it expected a contraction of 1.6 million bpd in consumption this year, versus a forecast of 1 million bpd last month, with demand curtailed by higher prices and restricted supply due to the U.S.-Israeli war with Iran. Supply disruptions in the Middle East and the Black Sea region continued to support oil prices, with the U.S. and Iran making competing claims over the Strait of Hormuz.