Brent rises to $115 after Houthis claim missile strike on Saudi Ras Tanura refinery

Yemen's Iran-aligned Houthis said on Oct 27 that they hit Saudi Arabia's Ras Tanura oil refinery, the largest in the kingdom, with a ballistic missile. Saudi authorities did not confirm the strike.

Brent crude futures rose $1.36, or 1.2%, to $115.24 a barrel by 08:58 GMT on Oct 28, Reuters reported. US West Texas Intermediate crude gained $1.62, or 1.6%, to $101.52. The rise followed a settlement almost $2 lower on Oct 27, when Middle East talks eased supply worries.

The strike

Houthi military spokesperson Yahya Saree said the missile caused a fire at the complex, which has a capacity of 550,000 barrels per day and includes a shipping terminal on the Gulf, west of the Strait of Hormuz. Saudi authorities said they shot down missiles over Riyadh and the Eastern Province without naming specific targets. The Saudi-led coalition said three Houthi missiles fired toward the Eastern Province were intercepted.

A person familiar with the matter told Bloomberg that the site was hit and the fire was contained, the Maritime Executive reported, but did not confirm a strike on the refinery itself. Maritime security firm Vanguard said the extent of damage and any impact on oil-loading operations remained unclear.

The Houthis also said they fired a ballistic missile at the defence ministry in Riyadh. Saudi authorities said they shot down two ballistic missiles aimed at the capital, and shrapnel hit a building, a construction project and a car.

Why Ras Tanura matters

Nearly all of Saudi Arabia's oil exports flow through two ports, Ras Tanura on the Gulf and Yanbu on the Red Sea, and the Houthis have attacked both before. Ras Tanura was shut for a period early in the Iran war as a precaution, and a March drone attack forced a partial shutdown of the refinery.

The Houthis declared a maritime blockade of Saudi Arabia after Yemen's conflict reignited in July, months into the war between the US and Iran. Since then they have struck Saudi ships, territory and oil facilities.

Who is exposed

Saudi Aramco runs the Ras Tanura refinery and terminal. Shares of ExxonMobil, Chevron and ConocoPhillips reached 52-week highs on Oct 23, when December Brent futures climbed above $116 a barrel.

ING commodity strategists said on Oct 28 that the market is pricing in a greater likelihood of renewed escalation as it waits for clarity on President Donald Trump's next move toward Iran. Market sources citing American Petroleum Institute data said US crude stocks fell 2.03 million barrels in the week to Oct 23, against an expected build of 15,000 barrels.

The Associated Press reported that US inflation has accelerated over the past couple of months as the Iran war pushed up oil and gas prices.

What comes next

• The US Energy Information Administration publishes its government crude inventory data on Oct 28.
• The Federal Reserve announces its rate decision on Oct 28, and the Associated Press reported it is expected to hold rates after raising them in September for the first time in three years.
• ExxonMobil and Chevron report third-quarter results on Oct 30.
• OPEC+ producers meet on Nov 1 and are expected to keep their December output targets steady, according to people with knowledge of the matter cited by Reuters.
• ING strategists said the market's risk premium might start to erode if the US midterm elections on Nov 3 pass without renewed strikes on Iran.