Brent at $109.64 amid supply concerns and U.S. moves to ease diesel shortage
Key Facts
Brent crude futures stood at $109.64 a barrel in morning trading on Wednesday, October 21, amid concerns over Middle East supplies and disruption in the diesel market. According to Reuters, futures traded at that price at 00:22 GMT, while U.S. officials said Washington was working with refineries around the world to increase fuel production. Oil prices had ended Tuesday's session slightly lower, according to Investing coverage, following a meeting between Iranian and Pakistani officials amid hopes of mediation. The meeting came as the oil market faced concerns over supply flows, with the effects of events in the Middle East extending to diesel supplies within the United States. In its fuel decision for Texas, the U.S. Environmental Protection Agency linked supply disruption in the state to those events.
In the United States, a Reuters poll estimated that crude oil inventories fell by about 800,000 barrels in the week ended October 16, ahead of the weekly government report. Distillate inventories on the U.S. East Coast were 32% below their seasonal average in September, according to the Energy Information Administration's October report. The agency used a comparison period of 5 years, measuring inventories against typical seasonal levels over that period. In the U.S. futures market, trading in the November West Texas Intermediate crude contract ended during Tuesday's session preceding the report, according to Reuters. The contract's expiry coincided with anticipation of U.S. inventory figures, as government and international measures to increase fuel availability continued.
Geopolitical concerns include oil flows through the Bab el-Mandeb Strait, after fighting in Yemen raised concerns over the route, according to Investing coverage published on Monday. The platform quoted the Houthis as saying they had attacked targets including Saudi Aramco facilities in the coastal city of Yanbu. The targets the group said it had attacked also included the Shaybah oilfield, among the claims cited in the coverage of its attacks. In its October outlook, the U.S. Energy Information Administration raised its forecast for the average Brent spot price in the fourth quarter of 2026 to $105 a barrel. The estimate represents an increase of $14 a barrel from the previous month's forecast, according to the agency's report, which also addressed low distillate inventories on the U.S. East Coast.
As part of the U.S. response to the fuel shortage, officials quoted by Reuters said they were also working with refineries outside the United States to increase production. They described the effort as involving "refineries around the world," referring to ongoing cooperation to boost fuel output. In Texas, the Environmental Protection Agency took emergency action to ease restrictions on certain types of diesel under its October 20 decision. The agency said "global events in the Middle East are affecting diesel fuel supplies within Texas," explaining the reason for its intervention concerning the state's supplies. It added in the decision that diesel inventories were not expected to return to their usual historical levels before early 2027, putting the expected recovery after the end of the current year.
Internationally, the International Energy Agency's Governing Board said in its October 15 statement that about 330 million barrels had been released under the collective emergency action. That volume reflects stocks already made available by the time of the statement, as part of the coordinated response to energy market conditions and supply security. The board added that about 100 million barrels remained to be released under the action, alongside volumes already drawn from reserves. It said some member countries had exceeded their initial stock release pledges, raising the total size of the action above the level originally announced. According to the board, total planned releases will exceed the original pledge of 400 million barrels, with those additional contributions from some members.
Plans announced by the International Energy Agency in its October 15 statement include accelerating the release of more than 20 million barrels of diesel as soon as possible. The agency's executive director, Fatih Birol, had called in an earlier statement on the global diesel market for an assessment of the need for additional releases of the fuel from stocks. His call included countries that had already completed their pledged releases, urging them to consider whether additional diesel supplies were needed. For the next U.S. data release, the Energy Information Administration lists Wednesday at 10:30 a.m. Eastern Time as its regular publication time for the weekly petroleum inventory report. The report's scheduled release on Wednesday, October 21, follows the Reuters crude inventory poll and comes amid measures to increase fuel production and accelerate diesel availability from emergency stocks.