Oil prices climbed on Wednesday as traders balanced the threat of supply disruptions from a strengthening storm in the Gulf of Mexico and renewed attacks in Saudi Arabia against signs that Middle Eastern crude supplies are recovering.
Brent crude futures rose 81 cents, or 0.8%, to $101.39 a barrel by 0635 GMT, while US West Texas Intermediate crude gained 61 cents, or 0.7%, to $90.05.
The market is being pulled between competing supply signals. A storm developing in the Gulf of Mexico is threatening US offshore production and refining capacity, while crude flows from the Middle East have recovered from disruptions that had pushed oil prices sharply higher.
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US forecasters said on Tuesday that the storm would become the first Atlantic hurricane of 2026 within two days and was likely to affect oil and gas infrastructure in the Gulf.
The offshore areas in its projected path account for about 15% of US crude production and 5% of US natural gas output. The storm could also disrupt as many as six refineries, while refineries across the US Gulf states represent roughly half of the country’s total refining capacity of 18.2 million barrels per day. That makes it a potential double disruption for the oil market. Production losses could tighten crude supplies, while refinery outages could reduce demand for crude but simultaneously create shortages of gasoline, diesel and other refined products.
KCM Trade chief analyst Tim Waterer described the storm as an “unwelcome complication for crude,” raising the possibility of production and refinery disruptions when the market is already dealing with multiple supply-side risks.
The immediate impact is being reinforced by evidence that US crude inventories are tightening. Crude stocks fell by 2.09 million barrels in the week ended October 2, according to data from the American Petroleum Institute cited by market sources.
“For now, the market is likely to remain nervous to any potential supply disruptions,” ING commodity strategists said, adding that Middle East supply risks remain significant amid continued attacks on ships.
The oil market is also watching whether recovering Middle Eastern production and exports can offset the risks created by continuing military activity.
Saudi Arabia’s East-West pipeline reached a throughput of 5.8 million barrels per day, Energy Minister Prince Abdulaziz bin Salman said on Tuesday, indicating that a key part of the kingdom’s oil transportation infrastructure is operating at substantial capacity.
The head of oil trader Vitol said around 12 million barrels per day of crude and another 2 million bpd of refined products had left the Middle East on tankers during the previous seven to 10 days. That volume is significant because it suggests that physical oil flows have continued even as geopolitical risks remain elevated. If exports remain at those levels, the market could avoid the sustained supply deficit that would otherwise support a much larger and more persistent price spike.
Security developments, however, continue to complicate the outlook.
Saudi Arabia’s airports in Jazan and Najran were targeted in two attacks on Monday evening, according to the Saudi aviation authority, as fighting between Saudi-backed Yemeni government forces and Iran-backed Houthi rebels intensified.
The attacks came as Saudi-backed Yemeni government forces launched a major offensive aimed at reclaiming territory from the Houthis following weeks of rebel advances. Riyadh has increased airstrikes in support of the campaign.
The combination of attacks on infrastructure, shipping risks and refinery disruptions is keeping a geopolitical premium in oil prices.
“Attacks and refinery outages are likely to keep the cracks elevated and scarcity will transmit to crude,” said Mukesh Sahdev, chief oil analyst at X Analysts in Sydney, referring to the premium refined products command over crude.
He said crude prices would remain near $100 a barrel “without any material de-escalation emerging.”
US-Iran tensions are another source of uncertainty. US President Donald Trump said on Tuesday that nobody knew who was running Iran during the eight-month US-Israeli war with Iran, indicating that relations between Washington and Tehran remain far from repaired.
The oil market therefore faces an unusual combination of risks. Physical supply is recovering, but the ability of that supply to move safely through a region facing continued attacks remains uncertain. At the same time, the US storm introduces a separate source of disruption just as inventories are declining.
For prices to move substantially higher from current levels, however, traders would likely need evidence that these risks are translating into sustained losses of production or exports rather than temporary disruptions.
Gold Slips As Dollar Strengthens Ahead of Fed Minutes
Gold prices moved lower on Wednesday as a stronger US dollar pressured the precious metal, and investors waited for minutes from the Federal Reserve’s September meeting for clues about the path of interest rates.
Spot gold fell 0.8% to $4,130.37 an ounce by 0627 GMT, while US gold futures declined 0.7% to $4,157.
The dollar index rose 0.3%, making gold more expensive for investors holding other currencies.
The release of the Fed minutes later on Wednesday is expected to provide further insight into the debate among policymakers over whether additional interest-rate increases are necessary to contain inflation.
“The yellow metal is likely to remain relatively stable with a mild downside bias,” said Frank Walbaum, a market analyst at Naga.com.
“Minutes will clarify the Fed’s monetary policy and the degree of support among policymakers for further rate increases and could reshape upcoming hike odds,” Walbaum said, adding that subsequent moves in long-term Treasury yields, the dollar, or oil prices triggered by Middle East developments could amplify gold’s direction.
Recent comments from Fed officials have maintained pressure on expectations for monetary easing. San Francisco Fed President Mary Daly said the need for further rate increases would depend largely on whether inflationary pressures fade or persist, while Kansas City Fed President Jeff Schmid said rates still need to rise further to bring inflation down.
Soft economic data have reduced expectations for an October rate increase, but traders still price an 88% probability of a hike by December, according to CME’s FedWatch tool.
The situation has yielded a challenging environment for gold. Higher interest rates increase the opportunity cost of holding an asset that does not generate income, potentially directing investors toward yield-bearing assets.
Yet gold’s broader demand picture remains strong. Delegates at the London Bullion Market Association’s annual conference in Sorrento, Italy, forecast that gold could reach $5,013 an ounce over the next 12 months.
China’s central bank also continued to add to its gold reserves in September, extending its purchasing streak to 23 consecutive months, official data showed.
Other precious metals weakened alongside gold. Spot silver fell 1.9% to $60.54 an ounce, platinum declined 1.3% to $1,679.20, and palladium lost 1.5% to $1,154.35.
The contrasting moves in oil and gold highlight the market’s competing macroeconomic forces. Oil is being supported by geopolitical and weather-related supply risks, while gold is facing pressure from a stronger dollar and the prospect of higher US interest rates.