Brent Settles at $116.72 a Barrel as Middle East Supply Risks Escalate
Key Facts
Brent crude settled at $116.72 a barrel on Oct. 23, up $3.55, or 3.14%, marking its highest close since April 29, according to Reuters. Prices rose as concerns grew over further supply disruption in the Middle East following Houthi attacks in Saudi Arabia, including on energy infrastructure. Reuters also reported that authorities in the United Arab Emirates had reported an oil spill off the country’s coast. In its statement, the UAE Ministry of Climate Change and Environment said the spill was detected off Umm Al Quwain. The ministry did not identify the cause of the spill, and authorities had not identified the tanker involved, leaving the incident among market concerns without linking it to a confirmed supply disruption.
Crude’s gains extended to its weekly performance, with Brent ending the week through Oct. 23 up 6%, compared with a 2.3% gain for West Texas Intermediate, Reuters reported. This comes as oil flows through the Strait of Hormuz remain exposed to shipping risks. The Associated Press said oil tankers continued to transit under U.S. military protection despite 28 attacks on ships in October, the highest number since the war began. By contrast, International Energy Agency data showed that ship-to-ship oil transfers in the Gulf of Oman helped increase flows through the strait in September. Those flows rose by 3.7 million barrels a day to 10.9 million barrels a day, the agency said. The figures show that alternative transport routes supported crude flows, while the risk of attacks remained a factor in market calculations.
On the supply side, global oil supply rose by 2.5 million barrels a day month over month in September to 102.3 million barrels a day, driven by Gulf producers, according to an International Energy Agency report. But the agency forecast that supply would post an annual decline averaging 5.8 million barrels a day in 2026, to 100.7 million barrels a day, before rising again by 7.7 million barrels a day in 2027. It said renewed attacks in the Gulf made the supply recovery fragile. In September, observed global oil inventories fell by 10 million barrels, leaving them 509 million barrels below their end-February level. Global diesel exports in September were also 700,000 barrels a day lower year over year, with a loss of 1.3 million barrels a day from Russia and the Middle East not fully offset by supplies from other regions. The data show a divergence between a monthly increase in supply and broader fragility in supplies and inventories.
The U.S. Energy Information Administration linked supply disruption to higher crude prices in September: the average spot price for Brent was $114 a barrel, up $23 from August, and reached $131 on Sept. 15 after disruption to Saudi Arabia’s East-West pipeline. The agency said the pipeline had carried more than 5.0 million barrels a day of exports through the port of Yanbu before the attacks. It estimated that average oil production shut in was 4.8 million barrels a day in September, down from 5.8 million in August and a peak of 10.9 million in May. For the fourth quarter of 2026, the agency expects the Brent spot price to average $105 a barrel, assuming oil flows from the Middle East remain restricted and average shut-in production stays at 4.5 million barrels a day during the quarter. These forecasts concern the average spot price and do not mean the contract’s Oct. 23 closing level will persist.
In U.S. markets, the S&P 500 fell 0.5% in the Oct. 23 session, the Dow Jones dropped 1.2% and the Nasdaq fell 0.2%, according to the Associated Press, which pointed to higher oil prices weighing on stocks. In the opposite direction, Chevron shares rose 2.9% and ConocoPhillips gained 3.6% in the same session. On the demand side, the International Energy Agency forecast that global oil demand would fall by an average of 2.6 million barrels a day in 2026, followed by a partial recovery of 2 million barrels a day in 2027. Even so, oil use in 2027 will remain 620,000 barrels a day, or 0.6%, below its 2025 level, according to the agency’s estimate. A partial demand recovery thus coincides with an expected increase in supply in 2027, while the agency says renewed attacks in the Gulf leave the supply recovery fragile.