Brent falls to $109.55 as supply recovers and Hormuz disruptions persist
Key Facts
Brent crude settled lower at $109.55 a barrel on Monday, October 19, according to Reuters, as Gulf supplies recovered and disruptions to oil flows through the Strait of Hormuz persisted. The benchmark lost 31 cents, or 0.3%, after touching $110 on Friday for the first time since May. Reuters attributed that level to concerns over developments in the wars in Iran and Ukraine. In the U.S. market, the December crude contract closed at $98.54 a barrel, down 0.5% in Monday's session. Liquidity was concentrated in that contract, while trading in the front-month contract was relatively thin ahead of its expiry, according to the agency.
The price decline followed U.S. President Donald Trump's signing on Friday of an executive order exempting some Russian energy exports from sanctions and tariffs, according to Reuters. The move aimed to lower energy prices ahead of the elections through exemptions covering Russian exports. On inventories, U.S. Energy Information Administration data showed crude stocks fell by 8.6 million barrels in the week ended October 9. Total inventories stood at 415.6 million barrels, according to figures cited by Reuters. Washington's measures on Russian energy coincided with this drawdown in U.S. crude inventories, as Gulf producers' exports were recovering some of their flows.
Global oil supply rose by 2.5 million barrels per day in September from the previous month to 102.3 million barrels per day, according to the International Energy Agency. Gulf producers led the increase in global supply. Their crude exports jumped by 4.4 million barrels per day to 13.9 million barrels per day during the month, led by Saudi Arabia. Meanwhile, oil flows through the Strait of Hormuz increased by 3.7 million barrels per day to 10.9 million barrels per day. The agency said ship-to-ship transfers in the Gulf of Oman helped deliver this increase in flows through the strait during September.
September's recovery followed a sharp decline in oil traffic through Hormuz, with flows reaching 4.9 million barrels per day in the second quarter, according to the U.S. Energy Information Administration. They had stood at 21.6 million barrels per day in the final quarter of the previous year. Kpler estimated average crude flows through the region during the week before the Reuters report published on Monday at about 8.5 million barrels per day. The International Energy Agency estimates available capacity in pipelines capable of diverting crude away from the strait at between 3.5 and 5.5 million barrels per day. This available capacity limits the ability of alternative pipeline routes to offset disruptions to passage through Hormuz.
On consumption, the International Energy Agency expects global oil demand to fall by 2.6 million barrels per day in 2026. That would bring projected demand for the year to 102.4 million barrels per day, according to its October report. The agency attributed the expected decline to higher oil prices and deteriorating economic prospects in some countries. In its price outlook, the U.S. Energy Information Administration raised its forecast for the average Brent spot price in the final quarter to $105 a barrel. The new forecast represents an increase of $14 a barrel from the previous month's estimate, coinciding with the International Energy Agency's forecast of a contraction in annual global consumption.
As part of the emergency response to the Hormuz crisis, the International Energy Agency said in a statement on Thursday, October 15, that about 330 million barrels had already been released from reserves. Its governing board agreed to accelerate the release of the remaining volumes under the crisis response. The agency said this includes "more than 20 million barrels of diesel as soon as possible". On trading, the front-month U.S. crude contract expires on October 20, according to Reuters. The U.S. Energy Information Administration set November 10, 2026, as the release date for its next short-term energy outlook.