Oil Falls to $100.98 for WTI Amid Volatility and Supply Risks
Key Facts
West Texas Intermediate fell 78 cents, or 0.77%, to $100.98 a barrel by 1311 GMT on October 27, while Brent crude dropped $1, or 0.86%, to $114.81, according to Reuters. U.S. crude remained above $100, contrary to the initial version of the report. The decline followed volatile trading during the session, with both benchmarks falling about 1% earlier before briefly reversing course. The moves coincided with regional talks in Tehran, but prices remained under pressure from supply concerns and maritime security risks. The market thus reflected a balance between the prospect of easing tensions and the risk of renewed attacks.
In an earlier price update on Tuesday, Brent was up 40 cents, or 0.4%, at $116.24 a barrel by 0718 GMT, while WTI rose 30 cents, or 0.3%, to $102.07. The gains came after both benchmarks had fallen about 1% earlier in the session, highlighting how quickly trading direction can shift. The diplomatic news had no settled effect in either direction: hopes for a resolution eased some concerns about supply disruptions, while the prospect of escalation remained. An analyst at SEB said prices included a large risk premium for the possibility of a U.S.-Israeli attack on Iran in the coming weeks. He added: "The impression now is that crude prices include a large risk premium for the possibility that the United States and Israel will attack Iran in the coming weeks."
Iran, Saudi Arabia, Turkey and Pakistan held their first four-way meeting in Tehran on October 26, and participants agreed to continue dialogue to strengthen cooperation, including on regional peace and security, according to Iran's official news agency. The statement did not specify a date or location for another meeting. Senior delegations from Saudi Arabia, Pakistan and Turkey had met Iranian officials in an effort to prevent a resumption of fighting, the Associated Press reported. Saudi Arabia said the visit aimed to open channels for negotiations to reduce tensions and strengthen regional security. The contacts place dialogue at the heart of market movements, but do not resolve the risks facing oil flows.
On the other side of the risk balance, the Houthis said they had targeted Saudi Arabia's Ras Tanura refinery with a ballistic missile, according to Reuters. Attacks on oil facilities heighten market concerns about the continuity of supplies, alongside risks to shipping. Reuters reported that October was the worst month for attacks on commercial vessels in the Strait of Hormuz and nearby waterways. The agency cited data from a Washington-based research institute that has monitored maritime security incidents worldwide since 2017. These developments keep geopolitical risks in place despite ongoing regional talks.
Supply and inventory figures point to further tightness in the market: ANZ said Gulf crude exports fell for a fourth consecutive week through October 27. Flows through the Strait of Hormuz were about 60% of their usual level, according to the bank's note. Global distillate inventories were also about 5% below their five-year average. These levels matter amid continued disruption to shipping lanes because they show that the impact of the risks extends beyond daily price movements. In the United States, the average price of regular gasoline rose to $4.29 a gallon on Monday, from $2.98 before the war, the Associated Press reported.
Tuesday's volatility came amid a broader October rally in Brent: the benchmark rose 3.1% in the Friday, October 23 session to close at $116.72 a barrel, after trading below $97 at the start of the month, the Associated Press reported. Looking ahead to the rest of the year, UBS expects Brent to stay near $110 a barrel through the end of 2026, compared with its previous forecast of $100. The bank linked its estimate to volatile Middle East supplies and geopolitical uncertainty. The higher forecast reflects continued concern about supply, even as a regional diplomatic track remains in place. The Tehran meeting statement set no date for further talks, while the bank's forecast extends through year-end.