International Oil Prices Shaken by 'Houthis' and 'Diesel Deal'... Rebound Fears (Comprehensive)

Trump's "Energy Ceasefire" Announcement Offers Relief
Houthi Attacks Raise Concerns of a U.S. Entry into the Conflict

AP Yonhap News

News that Yemen's Houthi rebels had continued attacking Saudi Arabia coincided with reports of an "energy ceasefire" between Russia and Ukraine, increasing volatility in international oil prices. For now, the market reacted more strongly to the energy ceasefire news, and the rise in international oil prices eased slightly. However, an American was killed during the Houthi rebels' offensive against Saudi Arabia, raising the likelihood of future U.S. military intervention. Concerns are mounting that oil prices could rebound sharply if the United States intervenes.

International oil prices have been extremely volatile since trading opened on Oct. 11 (local time). As of 11:50 p.m. Eastern Time on Oct. 11 (8:50 a.m. Korea time on Oct. 12), Brent crude futures, the benchmark for international oil prices, were trading at $103.72 per barrel, down 0.95% from the previous session. U.S. West Texas Intermediate (WTI) futures were also trading at $90.86 per barrel, down 1.08% from the previous day. Oil prices initially rose early in the session before turning lower.

Prices were mixed from the opening bell as negative developments in the Middle East coincided with positive news from the United States. In the Middle East, Houthi rebels continued their attacks on Saudi Arabia for a second consecutive day. According to Arab News, a Saudi news outlet, a projectile struck King Khalid International Airport in the Saudi capital, Riyadh, sparking a fire. At King Khalid Airport, which has been hit for two consecutive days, 13 people have been killed and around 300 injured so far. The Houthi rebels have claimed responsibility for the attack.

Reports that an American was killed during the attack on the airport the previous day also raised the possibility of U.S. military intervention. Following news of the American's death, U.S. President Donald Trump said at a White House press conference, "We may join Saudi Arabia in attacking the Houthis," adding, "We will consider it quickly."

Reuters-Yonhap

Amid a barrage of developments that could push oil prices higher, President Trump announced that Russia and Ukraine had agreed to an energy ceasefire. In a post on his social media platform Truth Social, he said, "An energy ceasefire in the Russia-Ukraine war takes effect immediately," adding, "Both sides have agreed. They must not violate it."

Last week, President Trump announced measures to improve supply in an effort to ease the burden of high oil prices, which are hurting his party's prospects in the midterm elections. He said he would postpone military strikes on Iran until after the midterm elections and announced that he had reached an agreement with Russia to expand diesel supplies. Under the agreement, the United States will temporarily lift sanctions on Russian diesel products, while Russia will supply 300,000 tons of diesel in October, 500,000 tons in November, and 1 million tons in December. The Russian government also announced that, under its diesel supply agreement with President Trump, it would lift the export ban on up to 500,000 tons of diesel starting Oct. 10.

Although the crude oil market is currently responding to the positive news of increased diesel supplies, concerns remain that prices could rise again depending on the situation in the Middle East. Bloomberg reported, "Further damage to Saudi Arabia will be inevitable unless U.S. forces deploy ground troops separately or at least provide air support to locate and intercept Houthi rebel drones and ballistic missile launchers." It added, "With an American also killed in the Houthi attack, pressure on President Trump to intervene has intensified. If he ultimately provides military support, fears of oil supply and demand disruptions due to an escalation will grow further."

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