LONDON / ConSynSer / – Amid ongoing geopolitical strains in the Middle East, global oil markets experienced notable fluctuations this week. On Wednesday, October 21, Reuters reported, Brent crude futures gained $1.21, reaching $110 a barrel, driven by concerns over regional instability. Simultaneously, US West Texas Intermediate crude advanced by more than $1, settling at $99 a barrel. Early in the trading session, new incidents involving tankers and attacks on Saudi energy facilities spurred prices upward. However, later developments indicating a recovery in Gulf export flows tempered these gains. Currently, Brent is trading nearly 80% higher than it was a year ago.
The Revolutionary Guards of Iran announced that naval mines had halted three tankers navigating routes that Tehran had not authorized. According to the UK Maritime Trade Operations agency, one vessel was struck near Oman. Meanwhile, Yemen’s Houthi movement claimed responsibility for attacks on Saudi Aramco sites in Yanbu and the Shaybah oilfield, as well as assaults on airports in Riyadh and Abha. These events have heightened concerns over oil supplies transiting through the Strait of Hormuz.
Throughout the day, market activity remained volatile. Brent temporarily lost its gains, dipping below $108 per barrel, while WTI briefly reached $100 before retreating to below $98. Freight rates in the Persian Gulf stayed at record levels, exerting additional upward pressure on prices. Over the past month, Brent has increased by approximately 8%. Following a dip to $100.34 in September, prices have since rebounded and remain significantly above that level, supported by persistent supply concerns.
Hormuz transit approaching prewar figures
US Secretary of State Marco Rubio indicated that oil shipments passing through the Strait of Hormuz are nearing prewar volumes. Data from tanker tracking services Kpler and Vortexa revealed rising crude exports from the Middle East since summer, as producers have ramped up shuttle shipments through Hormuz and ship-to-ship transfers in the Gulf of Oman. Saudi Arabia’s crude exports increased by 7.9% in August, reaching their highest level since March. These increased flows contributed to limiting the extent of Wednesday’s price rally.
Market participants also analyzed the latest US inventory data. The Energy Information Administration reported a crude stock decline of just over 3 million barrels last week, smaller than the 4.9 million-barrel draw initially reported by the American Petroleum Institute. US crude production decreased to approximately 13.27 million barrels per day from 13.68 million the previous week. These mixed signals add complexity to the outlook for US supply.
Russian diesel export deal and recent drone strikes
Russia was anticipated to dispatch its first diesel shipment to the United States on Thursday, following an agreement between President Donald Trump and President Vladimir Putin. Last week, Trump suspended Graham Act penalties on Russia, removing tariffs that would have impacted Russian fuel exports. Meanwhile, Ukraine has intensified drone attacks targeting Russian oil infrastructure, signaling Kyiv’s efforts to prevent Moscow’s diesel export expansion, according to Trading Economics.
On Thursday, October 22, oil prices extended gains after a drone strike at Saudi Aramco’s Shaybah oil field resulted in two fatalities. Brent surpassed $111 a barrel, and WTI moved above $99. Additionally, the US government advised some personnel and their families to evacuate US embassies in Saudi Arabia. Traders remain attentive to Gulf shipping activity, Saudi supply levels, and Russian fuel exports to gauge future price movements.