Brent jumps 13.6% in October as supply risks through Hormuz intensify
Key Facts
Oil futures rose at the end of October, with the December Brent contract closing at $117.64 a barrel on Friday, October 30, up $2.76, or 2.4%, after touching $118 during the session. Reuters said the contract, which expired that day, ended the month up 13.6%. By comparison, West Texas Intermediate crude gained 15.2% over the month, outpacing Brent. The monthly gains reflected the continued pricing of supply risks, as a security incident in the Strait of Hormuz returned to the market’s focus at month-end. The daily jump came as next-month contracts showed different levels from the expiring December contract.
While the expiring December contract posted the higher settlement, the more active January Brent contract rose $2.63 to $113.43 a barrel. The December WTI contract closed at $104.12, up $2.12, or 2.08%, for the session. The price difference between the December and January Brent contracts reflects their different delivery dates, so $117.64 is not a spot price for crude or the settlement price of the more active contract. The December contract had reached $118 during the session before trimming some gains by the close. On a monthly basis, both benchmarks remained sharply higher, with WTI ahead of Brent, according to Reuters data.
The risk premium followed a maritime incident near the strait. The UK Maritime Trade Operations said a small boat attached explosive devices to a tanker in the Strait of Hormuz, and it was not immediately clear who was behind the attack. The Associated Press reported that Iran’s Islamic Revolutionary Guard Corps said four tankers had been hit by mines and caught fire, but said it was unable to verify those claims. Oman also announced the evacuation of 25 crew members from a Panama-flagged tanker attacked in the strait. These developments kept shipping safety and the risks of tanker transits among the factors traders are monitoring in the oil market.
The Strait of Hormuz is particularly important to energy flows, as cargoes bound for Asian markets pass through it, making shipping risks relevant to transport costs and the price of crude delivered to refineries. The U.S. Energy Information Administration said higher tanker rates, which reached record levels in September, reflect increased insurance costs. It added that higher insurance costs and the use of longer routes are pushing up the cost of crude delivered to refineries, while tanker transit risks also support the risk premium in prices. The agency links higher shipping and insurance costs to risks to oil flows, without implying that a broad disruption to supply chains has occurred. These costs help explain how maritime risks can affect prices even before their full impact appears in supply volumes.
The latest concerns come in a market that has seen major production outages during the year. The EIA estimated that average crude oil production shut in because of supply constraints was 4.8 million barrels a day in September, down from 5.8 million in August. The average had peaked at 10.9 million barrels a day in May, according to the agency’s October Short-Term Energy Outlook. The decline in outages from the May peak points to a relative improvement in this measure, but does not eliminate the impact of new risks to shipping and navigation. In its market assessment, disrupted production levels and crude transport costs remain separate factors shaping the supply and price picture.
Brent prices also followed a volatile path during the third quarter before October’s gains. The EIA said futures began the quarter at $72 a barrel on July 1, their lowest level since February 26, then topped $100 on July 23. Spot prices averaged about $104 a barrel in the final two weeks of the quarter, while daily spot prices reached a peak of nearly $132 around September 15, according to the agency. It said markets during that period weighed peace talks against the prospect of a wider war, alongside supply disruptions, particularly from Saudi Arabia. These moves place October’s jump within a period marked by rapid changes in the market’s assessment of geopolitical risks and crude availability.
The EIA raised its forecast for the average Brent spot price in the fourth quarter of 2026 to $105 a barrel, up $14 from its estimate the previous month, assuming Middle Eastern flows remain constrained. It said disruption to flows through the Strait of Hormuz and alternative routes could lead to greater short-term volatility than its price forecast reflects. In the markets, an executive at BOK Financial said traders would continue to focus on oil flows from the Middle East and the possibility of an escalation in actions by the U.S. and allied forces. Reuters also said prices could become more volatile in the following weeks, citing Israel’s recent elections and the U.S. midterm elections scheduled for November 3. Seven key OPEC+ members are due to meet on November 1 to review oil market conditions.