Crude oil prices near $110
What's the story
Crude oil prices are nearing $110 per barrel amid fresh attacks on Saudi Arabia and fears of supply disruptions in the Middle East. Brent crude was trading at $106.58 a barrel on Wednesday, while US West Texas Intermediate (WTI) crude stood at $94.94. The spike comes as Yemen's Houthi rebels have intensified their assaults on Saudi targets, including an administrative building of Saudi Aramco in Dhahran.
Security fears
Houthi attack raises concerns over energy infrastructure
The Houthi attack on the Saudi Aramco building caused a limited fire, raising concerns over the security of energy infrastructure in one of the world's biggest oil-producing countries.
The market is also closely monitoring developments around the Strait of Hormuz, a key route for global oil shipments.
Attacks on vessels and uncertainty over tanker movements through this region have further stoked fears about crude oil availability and pricing.
Transit concerns
Strait of Hormuz's significance for global oil markets
The Strait of Hormuz is one of the world's most important oil transit routes. Continued uncertainty over shipping through this waterway has made oil markets more sensitive to fresh attacks and military escalation in the region.
Reuters reported earlier this month that oil shipments through the strait had come under pressure due to attacks on tankers and rising tensions in the Middle East.
Supply relief
Traders weigh potential Russian diesel exports against Middle East risks
The prospect of increased Russian diesel exports could help ease pressure on fuel markets.
However, traders remain concerned that additional supplies may not be enough to offset the risks from the Middle East conflict.
Reuters reported on Wednesday that markets were weighing supply risks arising from the fighting between Saudi Arabia and Yemen's Houthis against the possibility of increased Russian diesel flows.
Impact on India
India may face the brunt of rising crude oil prices
India, which imports a large share of its crude oil requirements, is vulnerable to sustained increases in international oil prices.
If crude remains elevated, the cost of importing oil could rise, putting pressure on the country's trade balance and increasing the burden on oil marketing companies.
Higher crude prices can also feed into inflation by raising transport and manufacturing costs.