Oil gains as US storm and Houthi air strikes threaten supply

US forecasters said on Tuesday ​a storm forming in the Gulf of Mexico would become the first Atlantic hurricane of 2026 within two days ​and would likely hit oil and gas producing facilities. The offshore areas in the Gulf in ⁠the storm's path produce 15% of US crude oil and 5% of the country's natural gas.

KCM Trade chief analyst ​Tim Waterer said the storm was an "unwelcome complication for crude, raising the prospect of production and refining disruptions at a ​time when the market already has enough supply-side headaches". The storm could affect six refineries.

Refineries in US Gulf states account for about 50% of the national capacity of 18.2 million barrels per day (bpd). US crude oil inventories fell last week, market sources said on Tuesday, citing data ​from the American Petroleum Institute.

Crude stocks fell by 2.09 million barrels in the week ended October 2. Read:Govt increases petrol by 88 paisas, cuts diesel by Rs1.88 for Oct 6"For now, the ​market is likely to remain nervous to any potential supply disruptions," said ING commodity strategists, adding that supply risks from the Middle ‌East ⁠are still very real amid continued attacks on ships.

Supply has been recovering. Saudi Arabia's East-West pipeline hit 5.8 million barrels a day, the kingdom's energy minister, Prince Abdulaziz bin Salman, said on Tuesday. Around 12 million barrels per day of crude oil and 2 million bpd of refined products have left the Middle East on tankers in the last 7 to ​10 days, the head of Vitol ​said.

However, Saudi Arabia's airports ⁠in Jazan and Najran were targeted in two attacks on Monday evening, the Saudi aviation authority said, as hostilities between the kingdom and Yemen's Iran-backed Houthis escalated.

The attacks occurred as Saudi-backed ​Yemeni government forces pressed a major offensive to retake territory from the Houthis, after ​weeks of rebel ⁠advances, with Riyadh stepping up airstrikes in support of the campaign.

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 premiums for ⁠refined products ​over crude. Crude prices would hold near $100 "without any material de-escalation emerging," he ​added.

US-Iran relations are no closer to repair, with US President Donald Trump saying on Tuesday that nobody knew who was running Iran during the eight-month US-Israeli ​war with Iran.