Oil prices rose on Wednesday, as markets balanced fears of supply disruption due to a storm heading towards oil and gas production areas in the Gulf of Mexico, attacks in Saudi Arabia, and increased crude flows from the Middle East.
Brent crude futures rose 93 cents, or 0.92 percent, to $101.51 per barrel by 00:22 GMT, while West Texas Intermediate crude rose 82 cents, or 0.92 percent, to $90.25.
The US Weather Service said on Tuesday that a storm forming in the Gulf of Mexico will turn into the first Atlantic hurricane in 2026 within two days, and is likely to affect oil and gas production facilities in the region. Marine areas in the storm's path produce about 15 percent of US crude oil production and 5 percent of natural gas production.
Tim Waterer, chief analyst at KCM Trade, said that the storm represents “unwanted complexity” for the crude market, in light of the potential disruption of production and refining operations, at a time when the market is already facing several pressures on the supply side.
The storm may also affect six refineries, while refineries located in the Gulf Coast states represent about half of the US refining capacity of 18.2 million barrels per day.
In the United States, preliminary data from the American Petroleum Institute, according to market sources, showed a decline in crude and gasoline stocks last week, while distillate stocks rose slightly. Crude inventories fell by 2.09 million barrels in the week ending October 2.
On the other hand, supplies from the Middle East are increasing, as Saudi Energy Minister Prince Abdulaziz bin Salman said on Tuesday that flows of the “East-West” pipeline had risen to 5.8 million barrels per day.
The head of Vitol said that about 12 million barrels per day of crude and two million barrels per day of refined products were leaving the Middle East on board tankers during the past seven to ten days.
But geopolitical risks returned to the forefront with the targeting of Jizan and Najran airports in Saudi Arabia in two attacks on Monday evening, according to the Saudi Civil Aviation Authority.
Mukesh Sahdev, senior oil analyst at XAnalysts in Sydney, said the attacks and refinery disruptions “are likely to keep refining margins high,” adding that the scarcity of products will spill over into the crude market. He expected prices to remain near the level of $100 per barrel “without any tangible calm appearing.”
Relations between the United States and Iran remain tense, with US President Donald Trump saying on Tuesday that no one knows who is running Iran after the eight-month war between the United States and Israel on the one hand and Iran on the other.
The Iranian Foreign Ministry spokesman said on Sunday that Washington knows well its counterpart in Iran and how its decision-making system works.
Moody's, the credit rating agency, said that Saudi Arabia's expected financial recovery in 2027 supports its expectations of continuing to make prudent decisions regarding spending and borrowing, noting that rearranging government investments helps the Kingdom maintain financial space, while continuing to implement economic diversification plans.
The agency added, in a comment on the preliminary statement of the Saudi budget for the year 2027, that the prolonged trade disturbances and additional spending limited the financial improvement that it had previously expected, but it saw that the trend towards controlling spending in the coming year supports the Kingdom’s financial path.
Saudi Arabia expects total spending in 2027 to reach about 1.392 trillion riyals ($371.2 billion), compared to revenues estimated at about 1.202 trillion riyals ($320.5 billion), resulting in a deficit of about 190 billion riyals ($50.7 billion), or 3.6 percent of the gross domestic product.
Moody's believes that rearranging government investment priorities allows continued spending on economic diversification projects, while at the same time reducing pressures on public finances. This is in line with the government’s tendency to continue implementing priority projects with economic and social returns, while maintaining the sustainability of public finances.
On the oil side, the agency said that it expects disruptions in strategic maritime shipping routes to continue until mid-2027, which may affect oil production. However, it indicated that the rise in crude prices helped mitigate the impact of the decline in production and exports during the recent period.
These expectations come at a time when the Ministry of Finance estimates indicate a contraction in real GDP by 3.6 percent in 2026, affected by a decline in oil activities by about 21.8 percent, while non-oil activities are expected to grow by 3.2 percent. The growth of non-oil activities reached 1.8 percent during the first half of the year, bringing their contribution to the output to 57.3 percent.
Moody's comment reflects a fiduciary reading of the preliminary statement that focuses on Saudi Arabia's ability to recalibrate the pace of spending and investment instead of retreating from the diversification agenda, which helps maintain financial flexibility in light of a geopolitical and commercial environment that remains highly volatile.
