Brent Settles at $106.65 as Hormuz Tanker Hits and Riyadh Airport Strikes Stack Up
Oil prices rose nearly $2 a barrel on Monday as Middle East security risks outweighed a fresh promise of Russian diesel. Brent crude futures settled up $1.93, or 1.8 per cent, at $106.65 a barrel, the highest since 15 September, Reuters reported. West Texas Intermediate settled at $93.74, up $1.89, or 2 per cent. The move followed a Saturday Houthi missile strike on Riyadh's international airport that killed 13 people and wounded more than 300, with further attacks on Sunday, and a run of tanker incidents in and around the Strait of Hormuz that UK Maritime Trade Operations has been logging this month.
UKMTO reported a tanker struck by a drone near Oman's Sohar and another damaged while transiting Hormuz, according to the Reuters account carried on 12 October. SEB commodities analyst Bjarne Schieldrop told Reuters that the sense of some kind of normality of Hormuz exports was shattered last week, and that fresh Houthi attacks on Saudi Arabia added to the lift in prices. The price rise came even as President Trump hailed a deal for Russia to supply more than 300,000 metric tons of diesel immediately to US and global markets, with more to follow, and announced a Russia-Ukraine ceasefire covering energy infrastructure.
Analysts were sceptical that the diesel volumes would force prices down quickly. The International Energy Agency's Fatih Birol said members should assess whether additional diesel releases are necessary and that countries behind on pledged volumes should accelerate them, prioritising diesel. Goldman Sachs raised its December Brent forecast to $90 a barrel from $85, estimating a risk premium of just over $20, according to the same Reuters report. In the US Gulf, Shell, Chevron and BP were working to restore production after Hurricane Isaias made landfall early Saturday, a separate supply cut that had already supported prices late last week. Physical flows through the strait remain the variable that paper markets cannot ignore.