WTI ends two-day decline amid new developments in the Middle East

• Above $100 again, WTI recovers from two days of losses as Middle East tensions heighten supply worries.
• Geopolitical risks remain high following claims of a strike on a Saudi refinery and reports that the US could take action against Iran.
• With Sunday’s OPEC+ meeting approaching, traders weigh Iran’s indications that it remains open to diplomacy.

At around $102.25 a barrel at the time of writing, West Texas Intermediate (WTI) is more than 2.50% higher on Wednesday. The US crude benchmark is recovering from the previous two days’ losses, with continuing tensions in the Middle East sustaining a geopolitical risk premium in oil prices.

Behind the rise was a claim by Yemen’s Iran-aligned Houthis that they had launched a missile strike on Saudi Arabia’s largest oil refinery on Tuesday. There was no immediate confirmation from Saudi authorities of the reported attack on the facility, which has a capacity of 550,000 barrels per day.

Supply concerns were compounded by a Wall Street Journal report that Washington had told Gulf states to prepare for a potential brief but intense military campaign against Iran following the US midterm elections on November 3. Asked by reporters on Wednesday about a possible post-election attack on Iran, US President Donald Trump said “anything is possible”.

Despite these developments, diplomatic efforts remain under way. Posting on X, Iranian Foreign Minister Abbas Araghchi said Iran “continues to give diplomacy a chance to succeed”. He added that it remains in close contact with intermediaries about ideas for putting its seven-day plan into effect in less than a week. Under the proposal, the Strait of Hormuz would reopen and talks would resume if the US accepted Iran’s demands.

A new draft agreement had been delivered to Iran by Qatari mediators in Tehran on Sunday, Reuters reported earlier on Wednesday. Iran was considering the proposal, with a response expected by the end of the week. An Iranian official, however, rejected it as unacceptable.

Pressure on global supplies was also evident in the World Bank’s latest outlook. The bank projects that oil supply will contract by 5.2% in 2026, the sharpest fall in more than four decades apart from the 2020 recession, while energy prices will climb 32% to a four-year high. It cautioned that a fresh escalation in the Middle East or further damage to Russian oil infrastructure could lift energy prices further.

Meanwhile, figures from the Energy Information Administration (EIA) showed a 1.462 million-barrel fall in US crude oil inventories, larger than the expected 300,000-barrel draw. Stocks had declined by 3.061 million barrels in the preceding week.

Sunday’s OPEC+ meeting is the next focus for traders. Sources quoted by Reuters expect producers to leave December output targets unchanged.