Oil prices climbed above $115 a barrel on Wednesday 28 October, reversing much of the previous session's fall as traders refocused on Middle East supply risk. Brent crude futures rose $2.02, or 1.8%, to $115.90 a barrel as of 0735 GMT, according to Reuters, while US West Texas Intermediate crude gained $2.01, or 2.0%, to $101.91.

Refinery claim puts risk premium back

The rebound followed a drop of nearly $2 a barrel on Tuesday, when hopes for diplomacy in the region had briefly eased supply fears. The latest rise came after Yemen's Iran-aligned Houthis said on Tuesday they had hit Saudi Arabia's biggest oil refinery with a missile, intensifying their strikes against the world's second-largest crude producer. Saudi authorities did not immediately confirm the strike on the facility, reported to have capacity of 550,000 barrels per day, and no damage assessment was confirmed in the reporting. Even so, the claim put a risk premium back into prices, with traders weighing whether production, refining or shipping could be affected if attacks continue.

OPEC+ expected to hold December targets steady

Attention now turns to Sunday's meeting of OPEC+ producers, where December output targets are expected to be kept steady, three people with knowledge of the matter told Reuters. The online meeting of seven core members — Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman — comes as Gulf producers rebuild exports disrupted by the Iran war, although most are still pumping below target. ING strategists said the market still priced in a greater likelihood of re-escalation, adding: "Oil prices remain elevated as the market waits for greater clarity on President Trump's next move toward Iran." If the coming weeks pass without renewed strikes on Iran, they said, the risk premium could erode.

Sources: Reuters via KRRO, Reuters via SRN News, HDFC Sky.