The session showed how finely balanced crude is. Houthi strikes added about $5 at the peak, and talk of a Hormuz deal took roughly half of that back within hours. Targeting Yanbu matters more than the headline count suggests: it is Saudi Arabia's route around Hormuz, so strikes there threaten the main workaround for Gulf supply. After WTI's 13% drop, short positioning leaves room for sharp rebounds on escalation. A credible phased deal remains the biggest downside risk. Record diesel prices and a possible US limit on diesel exports keep refining margins elevated, even on days when crude eases.---Houthi missiles aimed at Saudi Arabia's Red Sea export route put the risk premium back into crude. Talk of a phased US-Iran deal on Hormuz then showed how quickly diplomacy can take it back out.Summary:Brent settled around $106.50, up circa 3.5%, its highest close since mid-September. WTI finished around $94.50, snapping a six-session slide of roughly 13%Both benchmarks were up about 5% at their session highs before pulling backSaudi Arabia intercepted six Houthi ballistic missiles aimed at Taif and Yanbu. After settlement, the Houthis said they had also hit Aramco facilities in Yanbu and a target in RiyadhUS and Iranian negotiators are exploring a phased deal: Iran would reopen Hormuz and the US would lift its blockade. Both sides are reluctant to give up leverageNew US secondary sanctions led Gulf neighbours to bar Iranian airlines, and Tehran threatened retaliationWashington is weighing limits on diesel exports as prices sit near recordsOil prices ended Thursday circa 3% higher at a one-week high after a Houthi missile attack on Saudi Arabia revived supply fears, Reuters reported. The session was volatile, and crude pulled back from its peaks on reports that Washington and Tehran were discussing a way to reopen the Strait of Hormuz. Brent settled around $106.50 a barrel, up about $3.50, its highest close since September 15. WTI finished around $94.50, up almost $2.50, ending a six-session losing streak in which it had shed roughly 13%. At their highs, both benchmarks were up about 5%, with WTI briefly trading near $97.Saudi Arabia said it intercepted six ballistic missiles fired by the Iran-backed Houthis at the Taif area and at the Red Sea export hub of Yanbu. After settlement, the Houthis said they had also targeted Saudi Aramco facilities in Yanbu and a sensitive site in Riyadh, which added to the upside. The group has vowed to answer siege with siege and escalation with escalation. Earlier, a senior adviser to Iran's Supreme Leader warned that the conflict could spread to the Indian Ocean and beyond. He pointed to the link between the Gulf, the Red Sea, Hormuz and Bab al-Mandab.The timing matters because Saudi Arabia has been building crude volumes through its East-West Pipeline to Yanbu, although tanker loadings there have yet to resume. Aramco's chief executive has said the company is studying a fourth and fifth export route and can restore disrupted operations within days.Pressure on Iran is also widening. New US secondary sanctions target third-country firms that deal with Iranian companies. They led the UAE, Oman and other neighbours to bar Iranian airlines, and Tehran has threatened to make the airports of states that comply unusable.The talks explain why gains were trimmed. Negotiators in New York are exploring a phased deal in which Iran reopens Hormuz and the US lifts its blockade, possibly with Iran regaining access to frozen assets. Both sides are reluctant to give up their leverage, however. One senior Iranian official described the odds of a deal as extremely low, citing excessive US demands. A senior European official called Iran's own requests a very long list. Iran's president added a twist at the United Nations, saying Tehran hopes the US returns to a memorandum of understanding before the November midterm elections.Diesel remains the pressure point in refined products. Prices hit record highs in recent weeks, with Russia's export ban and attacks on Middle East energy infrastructure squeezing supply. US Energy Secretary Chris Wright has sounded out major refiners on voluntarily restricting diesel exports. That follows a report that Washington was preparing a 90-day ban, which Wright has disputed. The European Union has warned that a ban could hurt both sides, and analysts argue it would do little to lower prices while tightening global supply. Heating oil briefly turned lower on the day as the Hormuz reports landed.With crude swinging between missile headlines and talks headlines, both the risk premium and the prospect of a deal can move prices by several dollars in a single session. This article was written by Eamonn Sheridan at investinglive.com.