Brent hits $111.88, TASI falls on reports of Aramco headquarters evacuation
Key Facts
Brent crude futures reached $111.88 a barrel at 1104 GMT on Thursday, October 22, amid concerns over escalation and its impact on oil supplies, according to Reuters. The market moves came as the agency cited sources familiar with the matter as saying Saudi Aramco had asked employees to evacuate its headquarters in Dhahran. The sources said the company's instructions included working remotely after the evacuation. In equities, Saudi Arabia's TASI index fell 2.5% on Thursday following the Aramco news, according to LSEG data cited by Reuters. These developments coincided with pressure on oil transportation, as the International Energy Agency said tanker rates had reached record levels. The agency added that higher freight rates had raised crude delivery costs and squeezed refining margins, with shipping pressures affecting both the cost of getting oil to its destination and the returns from refining it.
The supply concerns follow an increase in global oil supply in September, according to the International Energy Agency's October Oil Market Report. Supply reached 102.3 million barrels per day during the month, a monthly increase of 2.5 million barrels per day. Gulf producers led the increase in global supplies, according to the agency. On inventories, the agency said global oil stocks at the end of September were 509 million barrels below their level at the end of February. The September supply increase thus came while global inventories remained below end-February levels, with the inventory comparison spanning a longer period than the monthly supply comparison.
In the United States, Energy Information Administration data released on October 21 showed weekly declines in commercial crude and gasoline inventories in the week ended October 16. Commercial crude inventories, excluding the Strategic Petroleum Reserve, stood at 412.5 million barrels at the end of that week. That compared with 415.6 million barrels in the week ended October 9, a weekly decline of 3.1 million barrels, according to the administration's inventory table. U.S. gasoline inventories fell to 205.3 million barrels in the week ended October 16. Gasoline stocks had stood at 208.3 million barrels in the previous week, marking a weekly decline of 3.0 million barrels. The decline in fuel inventories coincided with the drawdown in commercial crude stocks over the same weekly comparison period.
For the coming months, the International Energy Agency expects global oil demand to fall by 2.5 million barrels per day year on year in the fourth quarter of 2026. Despite this expected decline in demand, the agency said the oil market balance would remain "in deficit" through the end of the year. In its October outlook, the U.S. Energy Information Administration raised its forecast for the average Brent spot price in the fourth quarter to $105 a barrel. The new estimate represents an increase of $14 a barrel from the administration's forecast the previous month, a revision to the quarter's average spot price. Expectations of tight supplies of some fuels extend beyond the end of 2026, with the International Energy Agency forecasting that constraints on middle distillate supplies would persist into 2027. According to the agency, the persistence of these constraints means fuel market pressures will extend beyond the end of the current year.