Brent rises 3.14% to $116.72, its highest settlement since April

Key Facts

Brent futures settled at $116.72 a barrel on Friday, October 23, up $3.55, or 3.14%, their highest settlement since April 29, according to Reuters. West Texas Intermediate crude rose to $103.27 a barrel, gaining $3.80, or 3.8%, during the session. Reuters attributed the oil rally to Houthi attacks in Saudi Arabia and the concerns they raised about further disruption to energy supplies from the Middle East. The agency also cited a report by UAE authorities of an oil leak. Both benchmarks ended the week higher as supply risks pushed oil prices to elevated levels.

Brent ended the week up 6%, compared with a 2.3% gain for West Texas Intermediate, Reuters reported. EL7 data show Brent's daily close rose from $113.17 on October 22 to $116.72 the following day. The Associated Press said Brent had risen from less than $97 a barrel at the start of October and was at its highest level since June 2022. That description differs from the daily settlement comparison, which put Friday's close at its highest since April 29. In the United States, stocks fell as oil rose; the S&P 500 lost 0.5%, posting its second consecutive weekly decline, while the Dow Jones fell 1.2% and the Nasdaq 0.2%, according to the Associated Press.

Market concerns come amid disruption to shipping through the Strait of Hormuz. Iranian television reported that seven tankers were targeted or damaged by mines during the night of October 21 to 22, including four said to have caught fire after being targeted and three said to have been disabled after striking naval mines. The Associated Press said it could not independently verify the report. The agency reported that tankers willing to take the risk are crossing the strait at night through a U.S.-militarily protected corridor near Oman's coast. Those vessels carry oil from Gulf producers, illustrating that shipping through the passage continues despite security risks.

Alternative routes for transporting oil include Saudi Arabia's East-West pipeline, whose capacity has increased from 2 million barrels per day to 7 million, Aramco President Amin Nasser told the Associated Press in an interview. Meanwhile, the International Energy Agency said in its September report that more than 10 million barrels per day of Gulf production remained offline in August amid elevated security risks. The agency forecast that global supply would fall by 5.7 million barrels per day in 2026 to 100.7 million barrels per day. Observed global oil stocks also fell by 95 million barrels in August. Cumulative withdrawals since February reached 507 million barrels, averaging 2.8 million barrels per day, according to the agency's data.

The agency's own estimates, however, point to weak demand alongside supply constraints. In September, it forecast global oil demand would fall by 2.5 million barrels per day in 2026, a cut of 940,000 barrels per day from the previous month's forecast. In its October report, issued on October 14, it estimated an annual demand decline of 2.6 million barrels per day in 2026 and forecast a partial recovery of 2 million barrels per day in 2027. October estimates also showed crude exports from Gulf producers rising by 4.4 million barrels per day to 13.9 million in September, exceeding 75% of pre-war levels. Flows through the Strait of Hormuz rose by 3.7 million barrels per day to 10.9 million, while exports via alternative routes increased by 970,000 barrels per day to 5.6 million. The agency warned that escalating attacks on energy facilities and tanker traffic threaten the region's supply recovery gains.

The cost of transporting crude is adding to pressure on trade flows. The International Energy Agency said tanker rates reached record levels in September and that shipping crude from the Gulf to Asia exceeded $37 a barrel by mid-October, more than five times its pre-war level. The agency linked the higher cost to vessel congestion around the Strait of Hormuz, trade route diversions and an increase in ship-to-ship oil transfers, factors that extended delivery times. On the response front, the agency's Governing Board announced on October 15 that member countries had released about 330 million barrels from stockpiles as part of a collective action. The board said about 100 million barrels remained available for release, with the remaining volumes being accelerated. Plans include releasing more than 20 million barrels of diesel as soon as possible.