Brent rises 1.77% to $110.75 as tensions escalate in Saudi Arabia
Key Facts
Brent crude futures rose 1.77% to $110.75 a barrel at 0442 GMT during the session covered by the report, according to Reuters, amid escalating security tensions in Saudi Arabia and risks to regional oil supplies. Futures gained $1.93 a barrel as the United States ordered non-essential government employees and their families to leave the kingdom because of escalating Houthi attacks. The rise followed the previous Tuesday's session, when Brent ended lower despite reaching a 5-month high during trading. Futures fell 76 cents a barrel, or 0.69%, at that session's settlement, Reuters reported. The settlement price stood at $108.79 a barrel. During the same session, crude touched $111.99 a barrel before surrendering its gains to close lower.
In the security incident near the Shaybah oilfield, The National reported in its coverage dated October 21 that Saudi air defences intercepted a drone near a processing facility at the field. Falling drone debris killed two people and injured two others, according to the newspaper. The Saudi Energy Ministry said in a statement that the debris set fire to a contractor's vehicle outside the facility's perimeter. The ministry confirmed that the incident did not affect the field's operations, saying there was "no impact on operations at the oilfield". Shaybah thus remained operational after the interception, despite the casualties and fire caused by debris falling outside the facility.
The repercussions of the escalation extended to the U.S. diplomatic presence, with the State Department's order covering non-essential government employees and their family members, according to The National. The departure order was issued because of escalating Houthi attacks on Saudi Arabia, alongside threats to commercial shipping that affected crude movements through the region. Reuters cited Kpler in its report dated October 19 as saying average flows fell to about 8.5 million barrels a day in the week before the report. In the preceding week, the average exceeded 20 million barrels a day, placing the decline in flows before the Shaybah incident within the backdrop to the current escalation. Reuters attributed the decline in crude movements through the region to threats facing commercial vessels.
In the United States, crude inventories fell by 3.06 million barrels in the week before the October 21 data release, according to the U.S. Energy Information Administration, cited by Reuters. Total inventories stood at 412.5 million barrels after the draw. A Reuters poll had forecast a decline of 820,000 barrels over the same period. The actual draw exceeded the poll's estimates, adding a decline in U.S. inventories to falling oil flows through the region. These supply and inventory developments coincided with rising Brent futures and the security escalation that prompted Washington to issue the departure order from Saudi Arabia.
On the outlook, the Energy Information Administration projected in its October report that the Brent spot price would average $105 a barrel in the fourth quarter of 2026. The agency raised its estimate for that quarter by $14 a barrel from its forecast issued the previous month. On production policy, the OPEC+ countries participating in the production decision agreed at their October meeting to keep the required production levels for September 2026 in effect for November 2026, according to The National's coverage. This comes as Egypt's parliament postponed a vote on authorising the armed forces to assist Saudi Arabia if Riyadh requests it, according to Reuters. The vote is scheduled for October 26, while the countries participating in the OPEC+ decision are due to hold their next meeting on November 1 to review market conditions.