Oil prices surged around $2 early on Wednesday following an attack on a refinery in Saudi Arabia, the world's top crude exporter, renewing concerns about supply risks because of conflicts in the Middle East.
Brent crude futures rose $2.02, or 1.8%, to $115.90 a barrel as of 07:35 GMT. U.S. West Texas Intermediate (WTI) crude gained $2.01, or 2.0%, at $101.91.
Yemen's Iran-aligned Houthis said on Tuesday they had hit Saudi Arabia's biggest oil refinery with a missile, intensifying their strikes against the world's second-largest crude producer. Saudi authorities did not immediately confirm the strike on the 550,000-barrel-per-day facility.
Prices swung higher after dropping nearly $2 on Tuesday.
For now, the market is still pricing in a greater likelihood of re-escalation, ING commodity strategists said on Wednesday.
"Oil prices remain elevated as the market waits for greater clarity on President Trump's next move toward Iran," said ING strategists.
"If we get past the elections without renewed strikes on Iran, that might be enough for the market's risk premium to start eroding," they added.
Meanwhile, U.S. crude oil stocks eased, according to market sources citing data from the American Petroleum Institute. Crude stocks fell by 2.03 million barrels in the week ended October 23, the sources said.
However, analysts polled by Reuters estimated that crude inventories rose by about 15,000 barrels in the week. The market awaits the U.S. Energy Information Administration's official weekly inventory report, due later in the day, for more clarity.
The market will also watch an upcoming industry meeting on Sunday, where OPEC+ producers are expected to keep their December output targets steady, according to sources familiar with the matter.
Production in most of the seven core OPEC+ members – Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman – is below their output targets.
Crude oil exports from Russia's Baltic and Black Sea ports could fall next month as domestic refiners increase diesel output following a deal with Washington this month, traders said.