Brent Jumps 4% to $113.17, Its Highest Settlement in Five Months

Key Facts

Brent crude futures jumped 4% in Thursday’s session, Oct. 22, to settle at $113.17 a barrel, their highest settlement since May 4, as concerns grew over energy supply disruptions after Houthi attacks on Saudi Arabia, Reuters reported. Crude rose $4.35 in the session, while West Texas Intermediate gained 2.4%, or $2.32, to $99.47 a barrel. The gains came after attacks on the largest oil exporter brought supply risks back to the forefront of crude trading. Reuters described the move as lifting prices to a five-month high, a more accurate description than calling it a 22-week high. Coverage focused on the attacks that hit Saudi Arabia, while claims that tankers were targeted in the Strait of Hormuz remained separate from the facts that could be verified.

On Friday, Oct. 23, prices fluctuated as traders continued to assess supply risks. At 00:30 GMT, Brent was down 0.2% at $112.96 a barrel, and West Texas Intermediate had fallen 0.3% to $98.12, Reuters reported. Brent later resumed its rise, reaching $113.96, up 0.7% by 08:10 GMT, after touching $114.72 during the session, its highest level since May 4. The benchmark was on track for weekly gains of about 4%, its third straight week of increases, while U.S. crude was poised to end the week down 0.8%. The moves show the two crude benchmarks performed differently over the week, even though Thursday’s rally lifted both.

The buying wave followed an attack on King Fahd International Airport on Wednesday evening that killed two people and injured eight others, Saudi Arabia’s Civil Aviation Authority said, according to the Associated Press. The Houthis claimed responsibility for the attack, the agency reported. Separately, Iranian television quoted the Islamic Revolutionary Guard Corps’ navy as saying four tankers were targeted while transferring oil between ships, and three other tankers were damaged after striking mines. The Associated Press could not independently verify these claims. The market’s risk premium was therefore tied to multiple security concerns, while the account of the tanker attacks remained attributed to Iranian television.

The Strait of Hormuz remains a sensitive chokepoint for oil flows, while crude carriers continued to transit the passage despite the attacks, according to the Associated Press. The agency said some tankers carry oil at night through a corridor protected by U.S. forces near Oman’s coast, then transfer it to other tankers in the Gulf of Oman. The route adds time, cost and risks for seafarers even as shipments continue, the agency said. The Associated Press cited a Lloyd’s List Intelligence report that recorded 28 attacks on ships in October, the highest number since the war began. Continued transport means the risks include not only a possible halt to flows but also more difficult and costly operating conditions for shipping.

Saudi infrastructure provides an alternative route for exporting some crude away from the strait. Aramco Chief Executive Amin Nasser said the East-West pipeline’s capacity had increased from 2 million barrels a day to 7 million, bypassing the Strait of Hormuz. The U.S. Energy Information Administration estimated that oil exports through the pipeline to the port of Yanbu exceeded 5 million barrels a day before September attacks temporarily halted flows. Flows partially resumed on Sept. 22 after repairs to the pipeline, the agency said. It also said the average spot price of Brent crude was $114 a barrel in September, up $23 from August, following an escalation in attacks on oil facilities and tankers in the region. These figures place disruption to infrastructure and shipping lanes in the context of a rally that began before Thursday’s session.

Oil moves also spilled over into U.S. stock markets on Oct. 23, with three-quarters of the stocks listed in the S&P 500 falling, according to an Associated Press report. The report said Brent rose 3.6% to $117.20 a barrel. That reading differs from the futures prices Reuters reported at specific times during the session, as the figure comes from a separate market report. This came as published weekly forecasts pointed to gains of about 4% for Brent, against an expected 0.8% decline for West Texas Intermediate. Friday’s trading remains tied to developments in the attacks and shipping and supply risks in the coming days.