US crude futures fell about $1 on Thursday, paring some of Wednesday's gains, as traders weighed whether escalating Middle East fighting will further disrupt regional energy supplies. West Texas Intermediate was down 92 cents, or 0.9%, at $101.86 a barrel in early trading, after dropping as low as $101.75, having risen 3% on Wednesday. Brent had settled at $115.32 on Wednesday after rising $1.44, or 1%.

Yemen fighting drives the swings

Yemen's Houthis attacked Aden airport on Wednesday, government forces said, after the group warned people to evacuate the facility; air traffic was halted and UN staff left shortly before the strike, with no injuries reported among them, though Yemeni forces said civilians were hurt and material damage caused. A day earlier the Houthis said they had hit Saudi Arabia's largest refinery, a 550,000-barrel-per-day facility — a claim Saudi authorities had not confirmed. The back-and-forth has left traders alternating between relief at diplomacy and alarm at attacks.

Diplomacy still in play

Qatari mediators have presented Iran with a new draft deal to end the war with the US and Israel, an official briefed on the negotiations said, but a senior Iranian official described the ideas only as unacceptable and not amounting to an offer. Until credible signs of de-escalation emerge, analysts at Saxo Bank said, the market is likely to remain highly sensitive to geopolitical headlines, with a substantial risk premium embedded in prices. Thursday's pullback, in that light, looks less like calm returning and more like a pause between headlines.

Sources: Reuters, Reuters on Aden airport, Stockbiz.