US crude slips about $1 as traders weigh threats to Mideast oil flows

what happened

US benchmark crude futures lost roughly $1 on Thursday, giving back part of Wednesday's gains, as traders assessed whether the widening Middle East conflict could further disrupt energy flows in the region, Reuters reported. West Texas Intermediate was down 92 cents, or 0.9%, at $101.86 a barrel after dipping to $101.75 earlier. Prices had climbed 3% the previous session.

Yemen's Iran-aligned Houthis attacked Aden airport on Wednesday, according to Yemeni government forces, after the group told residents to leave the city as fighting intensified in the country. On Tuesday the rebels said they had hit Saudi Arabia's largest refinery, a 550,000 barrel-per-day plant, with a missile, and pledged to step up attacks on the kingdom, the globe's No. 2 crude producer behind the US. Saudi authorities have not yet confirmed the strike.

Reuters also reported that Qatari mediators handed Iran a fresh draft framework to end the conflict involving the US and Israel, citing an official familiar with the talks. A senior Iranian official dismissed the proposals as unacceptable and said they did not constitute a formal offer.

why it matters

Crude is highly sensitive to any threat to output and refining capacity in the Gulf, so reports of strikes on Saudi infrastructure and stalled diplomacy keep a risk premium in prices. Meaningful progress in the talks could ease that premium, while further attacks would likely keep it in place.

market impact

Oil: Middle East supply risks support WTI and Brent prices

• ▲WTI pressure up — threat of strikes on a major Saudi refinery constrains supply

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