Brent rises 1.7% to $110.63 after attack near Saudi Arabia's Shaybah field
Key Facts
Brent crude rose to $110.63 a barrel on Thursday morning, according to The National, following a drone attack near a processing facility at Saudi Arabia's Shaybah field, amid risks to energy facilities and shipping in the region. Crude gained $1.81 a barrel, or 1.7%, as of 7.36 a.m. UAE time. The rise followed Wednesday's session, when Brent closed at $108.82 a barrel, according to Reuters. Gains in that session were limited to 3 cents, or 0.03%, before Thursday morning's increase. In a parallel security development, the United States ordered some diplomats and families of U.S. government employees to leave Saudi Arabia, according to the Associated Press.
Saudi Arabia's energy ministry said debris from a drone intercepted by air defences near a processing facility at the Shaybah field killed two people and injured two on Wednesday, according to Arab News. The ministry said those killed were Nepalese and Philippine nationals, according to the Associated Press. The injured were Pakistani and Indian nationals, according to the ministry, which provided details of the incident to the agency. The energy ministry confirmed that "operations were not affected", despite the casualties caused by falling debris. Shaybah produces about a million barrels of crude a day, according to The National, placing the incident in the context of risks surrounding a major Saudi production field. The field has a separate precedent: Aramco announced in a statement dated 17 August 2019 that an incident had occurred at Shaybah's natural gas liquids facility. The company said at the time that the incident caused no injuries or disruption to its oil operations.
On supply flows, preliminary estimates from Kpler, cited by The National, showed total oil flows from the Middle East excluding Iran exceeded 24.5 million barrels a day in the week ended 18 October. The total includes oil passing through the Strait of Hormuz, alongside flows through alternative routes in the region. It also includes net ship-to-ship exports in the Gulf of Oman, part of the shipping activity counted by Kpler. The estimates also cover loadings at Fujairah and Omani ports and Red Sea exports, encompassing multiple routes for oil leaving the region. Shipping meanwhile faces persistent security risks, with Reuters reporting on Wednesday, citing Kpler data, that at least 18 attacks on vessels had been recorded over the previous two weeks.
In the United States, Energy Information Administration data released on Wednesday showed crude inventories fell by 3.06 million barrels in the previous week, according to Reuters. Total crude inventories stood at 412.5 million barrels after the draw. A Reuters poll had forecast a decline of 820,000 barrels, making the actual draw larger than expected. U.S. distillate inventories, meanwhile, rose by 1.68 million barrels during the same week. Total distillate stocks reached 104.3 million barrels, according to figures cited by the agency. The increase contrasted with the poll's forecast for a decline of 1.16 million barrels in distillate inventories, putting those stocks on the opposite trajectory to crude inventories.
In its assessment of regional supply conditions, the U.S. Energy Information Administration estimated average disrupted crude production in the Middle East at about 4.8 million barrels a day in September. Disrupted output was down from an August average of 5.8 million barrels a day. The agency said higher tanker insurance costs were contributing to increased freight rates in the region. Those costs were also reflected in higher prices for crude delivered to refineries, according to its assessment. In its October outlook, the agency forecast Brent would average $105 a barrel in the final quarter of 2026. That represents an increase of $14 a barrel from its September estimate for the same quarter. The agency is scheduled to release its next short-term outlook on 10 November 2026.