Oil prices rose over a percent on Wednesday after an administrative building belonging to Saudi Arabia's state-owned oil company Saudi Aramco in the eastern city of Dhahran was attacked, triggering a limited fire, the Energy Ministry said.

Markets also weighed the risk of supply disruptions from the fighting between the Houthis and Saudi Arabia against the prospect of increased diesel supplies from Russia.

Brent crude futures rose $1.40, or 1.35%, to $107.35 a barrel, while US West Texas Intermediate (WTI) crude futures gained $1.24, or 1.32%, to $95.38. Brent had fallen 0.9% on Tuesday, while WTI rose 0.4%.

The Dhahran complex houses a major operations centre for Aramco, which manages an extensive network of onshore and offshore oil rigs, pipelines, refineries and export terminals.

For the past week, the Houthis have been launching ballistic missiles and drones at key Saudi sites in retaliation for the kingdom's support for government forces in Yemen's renewed civil war. Riyadh's international airport has been struck four times, including an attack on Saturday that killed 13 people.

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The development gains significance as Saudi Arabia increased oil production last month despite disruptions to shipments caused by the US-Iran war. This contributed to a sharp rise in OPEC+ production, the Organisation of the Petroleum Exporting Countries and its partners, including Russia, said on Tuesday. OPEC also raised its oil demand forecast for 2027, citing the need to rebuild stocks.

Iran is adopting new tactics to target ships in the Strait of Hormuz in an effort to keep oil prices elevated and influence the US midterm elections, Reuters reported citing two senior Iranian officials.

The attack on the headquarters of Saudi Arabia's national oil company came after the Houthis warned all employees and civilians near the kingdom's oil facilities to evacuate on Tuesday, describing the sites as a "legitimate target".

Shortly after the order, Al Jazeera's team on the ground reported hearing explosions in Sanaa. Media outlets affiliated with the Houthis said Saudi-backed forces had carried out air strikes on an oil facility in the al-Sabah area.

Uncertainty over the eventual outcome of the conflict remains a key concern for markets. JPMorgan analysts said they were unable to model how the war would ultimately unfold. When the conflict began, the bank had assumed the US administration would avoid crossing certain economic thresholds. Seven months into the war, many of those thresholds had been crossed, while a clear exit strategy was still lacking.

The growing risk of further supply disruptions has also increased the possibility of higher oil prices. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks showed how disruptions to shipping could spread and intensify.

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Goldman Sachs has outlined a scenario in which oil prices could rise to $120 a barrel if attacks on vessels in the Middle East escalate. If exports return to normal, the bank expects prices to move back towards $80 a barrel.

Struyven said risks to shipping had become a major factor driving oil prices. Goldman Sachs sees significant upside potential for crude and also expects natural gas and refined product prices to rise. Struyven added that supply shocks affecting gas and fuels were larger than those in the crude oil market.

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