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Reuters reported that Brent crude futures settled at $116.72 a barrel on October 23 after advancing $3.55 or 3.14 percent while West Texas Intermediate crude rose $3.80 or 3.8 percent to close at $103.27. The benchmarks recorded respective weekly gains of 6 percent for Brent and 2.3 percent for WTI according to the settlement data. Brent posted its third consecutive weekly increase as geopolitical developments in the Middle East remained the dominant market driver.
Houthi rebels carried out multiple attacks across Saudi Arabia including on energy facilities which stoked fears of broader supply disruptions Reuters stated. Saudi Aramco ordered the evacuation of its headquarters in Dhahran on October 22 the first such action since the Iran conflict began according to the wire service. Fighting between Saudi Arabia the world’s top crude exporter and the Yemen-based group has intensified in recent days adding to uncertainty over regional energy flows.
An oil spill from a tanker was detected off the UAE coast the Ministry of Climate Change and Environment announced. LPL Financial chief cross-asset strategist Adam Turnquist said fears of supply disruptions drove the advance after Iranian-backed Houthi rebels carried out a series of attacks across Saudi Arabia including on energy infrastructure. The price action lifted the energy sector on Wall Street by 2.5 percent to a record high even as major indexes finished the session lower.
Andrew Lipow president of Lipow Oil Associates told Reuters the market is concerned about these continued Iranian attacks on tankers that we have seen increase over the last week. He added that while there has been an increase in oil transiting out of the Strait of Hormuz that could change at any minute. The developments follow a 4 percent gain for Brent on October 22 that took the contract to a five-month high according to prior Reuters coverage.
President Donald Trump stated on October 22 that the United States was not negotiating with Iran and that something would happen fairly soon. The New York Times reported that U.S. and Israeli officials had drawn up plans for renewed strikes on Iran after the midterm elections. Iran’s army chief separately indicated that Tehran had strengthened its capabilities and stood fully prepared for asymmetric warfare according to state media.
The latest surge builds on a rally that has lifted Brent by roughly a quarter since early September when prices first pushed above $100 a barrel Reuters assessments show. Reduced inventories and constrained spare capacity have left the global oil market vulnerable to further disruptions a September Reuters analysis found. U.S. gasoline prices stood at an average of $4.29 per gallon on October 23 roughly $1.22 higher than the level a year earlier according to market trackers.
