Saudi Arabia’s Ras Tanura oil refinery targeted in missile strike, Yemen’s Houthis say

Saudi Arabia’s largest refinery was the target of a ballistic missile launch claimed by Yemen’s Iran-aligned Houthis. The group said on Tuesday that it had fired towards the Ras Tanura oil refinery in the kingdom’s east, Reuters reported.

In a statement, Houthi military spokesperson Yahya Saree said the group had launched a ballistic missile at the facility in Saudi Arabia’s Eastern Province. According to Saree’s claim, the missile struck its target and triggered large fires at the site.

Attacks on Saudi military aircraft were also reported by the Houthis. The group further said it had stopped an advance by Saudi-backed forces near the Bab el-Mandeb Strait, a key shipping route in the Red Sea.

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In a separate development, early warning alerts over a possible threat in Najran, Abha, and Khamis Mushait were issued by Saudi Civil Defense earlier on Tuesday. Authorities subsequently announced that the threat had passed, without explaining what had triggered the alerts.

1.25% decline in WTI

$99.35 is the price of West Texas Intermediate (WTI) at the time of writing. It is trading 1.25% lower on the day.

WTI Oil: Key Questions

WTI Oil: Definition and Characteristics

Traded internationally, WTI is a grade of crude oil whose initials stand for West Texas Intermediate. It ranks among three major grades, alongside Brent and Dubai Crude. Its relatively low gravity earns it the description “light”, while its low sulphur content accounts for the term “sweet”. These characteristics make it a high-quality oil that is easy to refine. Produced in the United States, WTI is distributed through the Cushing hub, regarded as “The Pipeline Crossroads of the World”. WTI serves as an oil market benchmark, with its price regularly cited by the media.

WTI Oil Prices: Main Drivers

Supply and demand underpin WTI oil prices, as they do those of other assets. Stronger global growth can lift demand, while weak growth can have the reverse effect. Supply disruptions arising from political instability, wars, or sanctions can affect prices. Another major influence is the policy of OPEC, a group of leading oil-producing countries. WTI crude is also sensitive to the US Dollar’s value because oil is traded predominantly in US Dollars. A weaker US Dollar can therefore make oil more affordable, while a stronger currency can do the opposite.

WTI Oil Prices: The Role of Inventory Data

Weekly inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence WTI oil prices by showing changes in the supply-demand balance. A fall in inventories can signal stronger demand and lift prices. Conversely, rising stocks can point to greater supply and weigh on prices. The API publishes its report each Tuesday, followed by the EIA the next day. The two sets of results generally align: 75% of the time, they are within 1% of each other. As the EIA is a government agency, its figures are regarded as more reliable.

12 Nations: OPEC’s Influence on WTI Oil Prices

Production quotas for OPEC’s 12 oil-producing member nations are agreed collectively at meetings held twice a year. OPEC stands for Organization of the Petroleum Exporting Countries, and its decisions frequently affect WTI oil prices. Lower quotas can constrain supply and lift oil prices; higher production has the reverse effect. The broader OPEC+ grouping brings in ten additional non-OPEC members, with Russia the most notable.