Middle East crude exports through the Strait of Hormuz and alternative routes recover

Oil prices rose more than 2% Thursday. December Brent crude futures climbed 2.7% to $111.7 a barrel, while December West Texas Intermediate futures gained 2.5% to $99.57. Traders weighed renewed attacks on Saudi energy infrastructure and the risk of further U.S.-Iran hostilities even as Middle East oil supplies recovered.

Saudi Arabia’s Energy Ministry said Wednesday that air defenses intercepted a drone targeting a facility at Saudi Aramco’s Shaybah oil field. The Saudi Press Agency said falling debris killed two people and injured two others, and that the incident did not affect operations.

The gains followed a mixed Wednesday, when Brent settled little changed and U.S. crude fell as investors assessed a recovery in Gulf oil exports against continued regional security risks.

Diplomatic efforts to prevent further escalation were continuing as Middle East mediators sought to revive negotiations, The Wall Street Journal reported. The U.S. was preparing additional military options against Iran, and Washington was moving a third aircraft carrier strike group toward the region amid threats of renewed fighting, the Journal reported. The U.S. also ordered nonemergency government employees and their families to leave Saudi Arabia amid continued attacks by Yemen’s Iran-backed Houthi militia, according to The Wall Street Journal.

Despite persistent risks, Middle East crude exports had recovered substantially. According to Kpler, shipments through the Strait of Hormuz and alternative routes averaged more than 24 million barrels a day in the week through Oct. 18, above the prewar level of 23.3 million barrels a day.

Uncertainty over the sustainability of those flows continued to support oil prices. ING analysts said elevated freight costs and the risk of further disruptions had kept a significant geopolitical premium in crude markets, even as Middle East exports recovered.

In the United States, commercial crude inventories fell 3.1 million barrels to 412.5 million barrels last week, according to Energy Information Administration data released Wednesday. Gasoline stockpiles also declined, while distillate inventories rose.