Saudi Arabia’s Ras Tanura oil refinery struck by missile, Yemen’s Houthis say

Saudi Arabia’s largest refinery, Ras Tanura in the kingdom’s east, was the target of a ballistic missile launch reported by Yemen’s Iran-aligned Houthis on Tuesday, according to Reuters.

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. The missile struck its target and triggered large fires at the site, Saree claimed.

Attacks on Saudi military aircraft were also reported by the Houthis. The group said it had stopped Saudi-backed forces from advancing 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 were issued by Saudi Civil Defense earlier on Tuesday over a possible threat in Najran, Abha, and Khamis Mushait. Although authorities subsequently said the threat had passed, they gave no details of what had triggered the alerts.

How is the market reacting?

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

WTI Oil: Key Questions Answered

What defines WTI Oil?

Among the crude oil grades traded internationally, WTI, or West Texas Intermediate, is one of three major types alongside Brent and Dubai Crude. Its relatively low gravity and sulphur content earn it the descriptions “light” and “sweet”, respectively. Regarded as a high-quality oil that is easy to refine, WTI originates in the United States and is distributed through the Cushing hub, known as “The Pipeline Crossroads of the World”. WTI serves as an oil market benchmark, with its price regularly cited in media reports.

What determines WTI Oil prices?

Supply and demand underpin WTI oil prices, as they do those of other assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions arising from political instability, wars or sanctions can also affect prices. Another major influence is the production decisions taken by OPEC, a grouping of leading oil-producing countries. As oil is traded mainly in US Dollars, the currency’s value also affects WTI crude oil prices: a weaker US Dollar can make oil more affordable, while a stronger one can have the opposite effect.

Why do inventory figures affect WTI Oil prices?

WTI oil prices respond to the weekly oil inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA), as changes in stock levels reflect shifts in supply and demand. A decline in inventories can signal stronger demand and push oil prices higher. Conversely, rising inventories can point to greater supply and weigh on prices. The API releases its report each Tuesday, followed by the EIA the next day. The two sets of figures are generally similar, coming within 1% of each other 75% of the time. As the EIA is a government agency, its data is regarded as more reliable.

How do OPEC decisions affect WTI Oil prices?

At meetings held twice a year, the 12 oil-producing nations that make up OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for member countries. These decisions frequently influence WTI oil prices. A reduction in quotas can constrain supply and lift oil prices, whereas an increase in OPEC production has the reverse effect. The wider OPEC+ grouping brings in ten additional non-OPEC members, with Russia the most notable among them.