Brent rises to $111.03, Asian stocks fall amid Iran tensions
Key Facts
Oil prices rose and Asian stocks and U.S. futures fell on Thursday morning, October 22, amid military tensions and shipping disruptions, alongside concerns over financing data centre expansion. Reuters reported that Brent crude rose more than 2% to $111.03 a barrel, nearing a 5-month high. In a separate reading that same morning, an Associated Press report put crude up 1.6% at $110.55 a barrel. In equities, Reuters reported that MSCI's Asia-Pacific share index outside Japan fell 1.8% to its lowest level in about 3 months. The Associated Press said U.S. stock futures also fell alongside Asian markets. The agency said AI stocks were under pressure from concerns about a slowdown in data centre construction amid rising borrowing costs. In describing those concerns, it said "data centre construction could slow", adding another factor to the tensions surrounding energy markets.
In shipping, the Associated Press cited Iranian television as saying 7 oil tankers were damaged and caught fire overnight in the Strait of Hormuz, attributing this to attacks or collisions with naval mines. The Iranian claim followed a Reuters report published on October 21 citing Kpler data showing at least 18 attacks on ships over the preceding two weeks. On the military front, Axios, citing Israeli and U.S. officials, reported that dozens of Israeli air force fighter jets flew a sortie on Monday that reached the Iranian border. This was preceded by military preparations for a multi-day bombing campaign, according to Investing.com, citing the Financial Times. The report said the Israeli military had prepared the campaign for the weekend of October 10. The targets it listed included power stations, nuclear facilities and Iranian regime assets. In earlier remarks reported by Reuters, Benjamin Netanyahu said he did not support a pre-emptive strike against Iran before Israel's elections scheduled for October 27, while warning against targeting Israel.
In the United States, the Energy Information Administration's report released on October 21 showed commercial crude inventories, excluding the Strategic Petroleum Reserve, fell in the week ended October 16. The agency said inventories declined by 3.1 million barrels to 412.5 million barrels, using the rounded figures in its official summary. Alongside the decline in crude stocks, U.S. refineries processed 16.6 million barrels per day during the reporting week. Throughput rose by 34,000 barrels per day from the previous week, while refinery capacity utilisation reached 93.4%. Among petroleum products, gasoline inventories fell by 3.0 million barrels, leaving them 5% below the 5-year average, according to the agency. Distillate inventories, meanwhile, rose by 1.7 million barrels over the same weekly period but remained 9% below the 5-year average. The increase in refinery throughput thus coincided with declines in crude and gasoline stocks, while distillate inventories remained below their average despite the weekly increase.
On diplomatic contacts, The National quoted Abbas Araqchi as telling Iraqi television that indirect negotiations between Iran and the United States were continuing. He said the talks were taking place through mediators Pakistan and Qatar, alongside military preparations and tensions surrounding shipping. On the timing of any resumption of operations, the Associated Press quoted Donald Trump as saying he "will not order a resumption of military strikes on Iran before the midterm elections". The U.S. midterm elections take place on November 3, after Israel's elections scheduled for October 27, to which Netanyahu had linked his earlier remarks on a pre-emptive strike. In its oil market outlook, the Energy Information Administration forecast in its October report that Brent spot prices would average $105 a barrel in the fourth quarter of 2026. That estimate represents an increase of $14 a barrel from the agency's forecast in the previous month's report. The agency said in its outlook that "Brent crude spot prices will average $105 a barrel in the fourth quarter", while indirect negotiations continue ahead of the U.S. elections on November 3.