Brent rises to $110.10 as Gulf crude flows disrupted
Key Facts
Brent crude futures rose to $110.10 a barrel on Tuesday morning, according to Reuters, as persistent shipping risks in the Gulf supported the oil market's risk premium. Crude was up 55 cents, or 0.50%, by 0319 GMT. The rise followed Brent's close on Monday at $109.55 a barrel. Crude had lost 31 cents, or 0.3%, in that session, according to settlement prices reported by Reuters. Tuesday's gains coincided with continued uncertainty over the details and duration of U.S. exemptions, limiting the pricing in of a sustained increase in Russian supply, according to an analyst quoted by the agency.
Kpler estimated average weekly crude flows through the Gulf region at about 8.5 million barrels a day, Reuters reported on Monday. That compares with more than 20 million barrels a day in the preceding week, a decline reflecting the scale of disruption to supply flows through the region. The agency cited a company note reporting attacks on at least 18 vessels over two weeks, supporting the continued risk premium. Goldman Sachs raised its Brent price forecast for December 2026 to $90 a barrel. The bank's previous estimate was $85, with the upward revision still leaving its year-end forecast below the price recorded in Tuesday's trading.
Goldman Sachs links easing oil prices in its base case to the global supply-demand balance shifting into surplus. The bank expects Brent to average $80 a barrel in 2027 as Gulf supplies recover. It sees continued adaptation to disrupted flows supporting that recovery, alongside an increase in transport capacity available to move crude. That capacity includes pipelines, which the bank cited among the factors supporting the restoration of supplies. The bank's projected price path thus rests on improved oil flows to market and a shift in the global balance towards surplus, while attacks on vessels remain a factor supporting the current risk premium.
On U.S. policy, the executive order implementing the Graham Act grants exemptions from specified tariffs and sanctions under the law while keeping earlier sanctions in place. President Donald Trump signed the law on September 18, 2026, according to the text of the order published on the White House website. The order maintains sanctions issued under earlier executive orders concerning harmful activities by the Russian government. It states that "nothing in this order affects any sanctions" imposed under those earlier orders. The exemptions remain in effect until the relevant U.S. authorities determine that further action is appropriate, with no fixed expiry date.
Tim Waterer, an analyst at KCM Trade, said uncertainty over the details and duration of the exemptions was limiting the market's response to the prospect of increased Russian supply. He added in remarks reported by Reuters: "Until the details and duration become clear, the market is unlikely to fully price in a sustained increase in supply." That assessment comes as the market weighs the prospect of additional Russian supplies against risks of disruption to Gulf shipping. Marco Rubio said in remarks reported by Reuters on Monday that the president would use up to 60 days to assess the impact of sanctions and tariffs on the global economy. That period concerns the impact assessment, while the executive order ties the continuation of exemptions to a decision by the relevant authorities on further action.
Looking ahead, the front-month West Texas Intermediate crude contract expires on October 20, according to Reuters. Trading was already concentrated in the more liquid December contract as the front-month contract neared expiry. The weekly U.S. oil inventory report is normally released on Wednesday, according to the U.S. Energy Information Administration. The agency sets 10:30 a.m. Eastern time as its usual release time. Regionally, Egypt's parliament postponed until October 26 a vote on authorising the armed forces to assist Saudi Arabia if requested, Reuters reported.