Brent futures top $114 as U.S.-Iran and Gulf threats persist

Gulf oil flows recover above prewar levels despite renewed disruption concerns

On Friday, December Brent crude futures rose 1.3% to $114.64 a barrel, while December West Texas Intermediate futures gained 1.5% to $100.95. The Wall Street Journal said traders were weighing renewed U.S.-Iran hostilities and the risk of further attacks on Saudi energy infrastructure against recovering Middle East oil supplies.

The gains came after Brent climbed 4% Thursday to settle at $113.17 a barrel, its highest level in more than five months. U.S. crude gained 2.4% to $99.47 in the prior session.

The Wall Street Journal reported that Yemen’s Iran-backed Houthi militia had attacked Saudi Arabia’s Shaybah oil field and King Fahd International Airport in Dammam on Wednesday. Saudi Arabia’s energy ministry said operations at Shaybah were unaffected, though falling debris caused casualties.

The United States was preparing additional military options against Iran and moving more forces toward the region, according to The Wall Street Journal. The United States was deploying a third aircraft carrier strike group and additional Marines while relocating some military and diplomatic personnel amid concerns about possible retaliation.

Iran had warned publicly and through private diplomatic channels that renewed U.S. and Israeli strikes would prompt attacks on airports, pipelines and other economic infrastructure across the Persian Gulf, The Wall Street Journal reported. The report said Iran retained significant missile and drone stockpiles despite damage to its military capabilities.

Despite the escalation, Middle East oil shipments had recovered above prewar levels. Kpler said flows through the Strait of Hormuz and alternative export routes averaged more than 24 million barrels a day in the week through Oct. 18, above the prewar level of 23.3 million barrels a day.

ING said Friday that prices were being supported more by the risk of renewed disruptions than by current supply conditions, even as Gulf oil flows remained resilient. ING’s previous forecast for Brent to average $80 a barrel in the fourth quarter now appeared unattainable because renewed U.S.-Iran fighting threatened to keep a substantial geopolitical risk premium in prices.

Earlier MSI reporting on Oct. 1 described futures rising while Middle East exports recovered toward prewar levels amid unresolved U.S.-Iran conflict risks. By Friday, Brent had reached $114.64, Kpler counted flows above the prewar level, and ING said potential disruption, rather than present supply conditions, was supporting prices.