LONDON / ConSynSer / – On Wednesday, October 21, Brent crude futures increased by $1.21 to reach $110 per barrel, according to Reuters, driven by ongoing Middle East tensions that keep the oil markets tense. Meanwhile, US West Texas Intermediate crude jumped over $1, reaching $99 a barrel. Early in the trading session, prices were pushed higher by new incidents involving tankers and Saudi energy facilities. However, these gains were later offset by signs that Gulf export flows are beginning to recover. Compared to the same period last year, Brent is trading nearly 80% higher.
Iran’s Revolutionary Guards claimed that naval mines had halted three tankers traveling along routes not authorized by Tehran. Additionally, a vessel was struck near Oman, as reported by the UK Maritime Trade Operations agency. The Houthi movement in Yemen announced it targeted Saudi Aramco facilities in Yanbu and the Shaybah oilfield. They also claimed responsibility for attacks on airports in Riyadh and Abha. These events heightened concerns over the security of shipments passing through the Strait of Hormuz.
Throughout the day, trading remained volatile. Brent initially gained but then lost its earlier gains, dipping below $108 a barrel. WTI briefly reached $100 before retreating below $98. Freight rates in the Persian Gulf continued to stay at record levels, exerting additional upward pressure on prices. Over the past month, Brent has risen approximately 8%. The market had rebounded after Brent slid to $100.34 in September, and it remains well above that level today.
Hormuz exports nearing prewar volumes
Secretary of State Marco Rubio indicated that shipments passing through the Strait of Hormuz are approaching levels seen before the war. Data from tanker trackers Kpler and Vortexa showed an increase in crude exports from the Middle East since summer. Producers have increased shuttle shipments through Hormuz and engaged in ship-to-ship transfers in the Gulf of Oman. Saudi Arabia’s crude exports in August rose by 7.9%, reaching their highest point since March. These increased flows contributed to limiting the extent of Wednesday’s rally.
Market participants also evaluated recent US inventory data. Crude inventories decreased by just over 3 million barrels last week, according to the Energy Information Administration. This decline was less than the 4.9 million barrels reported earlier by the American Petroleum Institute. US crude production slightly decreased to about 13.27 million barrels per day from 13.68 million the previous week. The mixed data provided an uncertain outlook on US supply levels.
Russian diesel shipment deal and drone attacks in the region
Under an agreement between President Donald Trump and President Vladimir Putin, Russia was expected to ship its first diesel cargo to the US on Thursday. Trump suspended Graham Act penalties last week, removing tariffs that would have impacted Russian fuel exports. Meanwhile, Ukraine has intensified drone strikes targeting Russian oil infrastructure. According to Trading Economics, these attacks aim to prevent Moscow from expanding its diesel exports further.
On Thursday, October 22, oil prices extended gains after a drone strike at Saudi Aramco’s Shaybah oil field resulted in two fatalities. Brent surpassed $111 a barrel, and WTI rose above $99. Additionally, Washington advised some personnel and their families to evacuate US embassies in Saudi Arabia. Traders continue to monitor Gulf shipping activity, Saudi supply levels, and Russian fuel exports for insights into the future direction of prices.