Key Points
- Brent touches its highest level since May, while US crude closes above $100
- Iranian attacks on shipping raise concerns over oil flows through the Strait of Hormuz
- US crude stocks fall 8.6 million barrels, adding to supply concerns
ISLAMABAD: Global oil prices posted strong weekly gains through October 16, with Brent crude settling near $110 a barrel and US crude closing above $100.
The oil benchmarks are trading high on persistent shipping risks in the Middle East. Meanwhile, Ukrainian attacks on Russian energy facilities heightened concerns over global supplies.
Brent crude futures settled at $109.86 a barrel on Friday, up $3.94, or 3.7 per cent, on the day and 4.9 per cent over the week.
US West Texas Intermediate (WTI) crude closed at $101.41 a barrel, gaining $3.44, or 3.5 per cent, on Friday and 7.8 per cent for the week. Brent reached its highest level since May 19, while WTI closed at its highest level since September 17.
The weekly rally reflected renewed fears that the conflict involving Iran and the United States could further disrupt oil shipments through the Strait of Hormuz, a vital waterway linking the Arabian Gulf with international markets.
A sharp decline in US crude inventories and damage to Russian refining infrastructure have added concerns over the availability of crude and petroleum products.
Hormuz disruptions keep oil markets on edge
Attacks on commercial shipping intensified during the week, raising fresh questions about the security of oil shipments through the Strait of Hormuz.
Iran appeared to be targeting ships involved in ship-to-ship oil transfers, while maritime authorities reported projectile attacks on ships in the region.
Two ships sank following Iranian attacks, including the Singapore-registered container ship GFS Pride, which caught fire after being struck earlier on Tuesday.
Its crew was evacuated without reported injuries. The incidents added to a series of attacks that have made shipping through the strategic waterway increasingly hazardous.
Ship-tracking firm Kpler estimated that oil shipments cleared through Hormuz averaged 11.62 million barrels per day in the seven days to October 13, around 68 per cent of a baseline of 17.15 million barrels per day.
The shortfall highlighted the continuing disruption to regional oil movements despite earlier signs of recovery.
The risks were not confined to the strait. Saudi Arabia intercepted a ballistic missile aimed at the port city of Yanbu, although no damage was reported.
In Yemen, escalating hostilities involving the Houthi group and the Saudi-led coalition added to concerns about regional security and the safety of energy infrastructure.
These developments sustained a risk premium in oil prices, as traders weighed the possibility of further attacks against the prospect of additional supplies reaching international markets.
US inventory draw supports prices
US crude inventories fell by 8.6 million barrels during the preceding week, exceeded market expectations and helped push WTI higher.
Hurricane-related production disruptions and shutdowns contributed to the decline, reinforcing concerns about near-term availability in the US market.
WTI’s stronger weekly performance reflected this domestic supply pressure alongside the broader geopolitical concerns affecting both benchmarks.
However, efforts to ease supply shortages appeared to be a potential counterweight to the rally.
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The International Energy Agency agreed to release more than 20 million barrels of diesel and other fuel supplies, including oil remaining from earlier emergency stock-release commitments.
The United States also considered easing sanctions on certain tankers used to transport Russian, Iranian and Venezuelan oil, potentially increasing shipping capacity.
Such measures may provide relief, but their impact depends on how quickly supplies can reach buyers. Continued attacks, shipping delays and elevated transportation costs could limit the benefits.
Russian refinery damage adds to fuel concerns
The market also watched developments in Russia, where a Ukrainian drone attack disrupted operations at the Ryazan oil refinery.
Further interruptions to Russian refining capacity could tighten supplies of diesel and other petroleum products at a time when Middle Eastern shipping remains vulnerable.
The coming week’s direction will hinge on whether tensions ease sufficiently to restore confidence in oil shipments through Hormuz. A sustained recovery in flows could reduce the geopolitical premium.
