Oil surges to a five-month high amid the situation in the Middle East
Kyiv • UNN
Oil prices rose due to Houthi attacks and risks to supplies from the Persian Gulf. Brent was trading near $110 per barrel.
Oil prices rose on October 20, with Brent hovering near a five-month high, as traders factored in geopolitical risk linked to Houthi attacks on Saudi infrastructure and reports of attacks on vessels in the Persian Gulf. UNN reports this, citing Reuters.
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Brent crude futures rose 52 cents, or 0.47%, to $110.07 a barrel by 06:28 GMT (09:28 Kyiv time), after rising to $110.70 a barrel in the previous session, reaching their highest level since May 20.
The November West Texas Intermediate (WTI) U.S. crude contract, which expires on Tuesday, rose 0.36% to $104.03. The more active December contract gained 26 cents, or 0.26%, to $98.80.
"Oil prices remain persistently high... This indicates that the market is pricing in a significant risk premium given the volatility of the situation," ING analysts said in a note published on Tuesday.
"However, if supplies continue uninterrupted despite the geopolitical situation, the risk premium will likely gradually decline. For now, there are no signs of this," the note said.
At least 18 attacks on vessels have been carried out over the past two weeks, keeping the risk premium unchanged, according to a note from vessel-tracking company Kpler published on Monday.
Iran-backed Yemeni Houthis said on Monday that they had carried out several attacks on Saudi energy, airport and military facilities, including an Aramco facility in Yanbu, the Shaybah oil field, King Khalid International Airport in Riyadh and Abha Airport. Saudi authorities did not immediately confirm these claims.
Also on Monday, 58 people were killed and more than 200 wounded in a Houthi attack on a training camp for government security forces in Yemen's Shabwa province.
The renewed attacks have heightened concerns about regional stability and highlighted the continuing risks to energy supplies from the region, keeping oil prices above $100 a barrel.
In the United States, oil inventories were expected to have declined over the week along with stocks of oil products, according to a preliminary Reuters poll conducted on Monday.
U.S. President Donald Trump issued an order on Friday canceling key Russia-related sanctions and U.S. tariffs, including duties on goods and penalties for purchasing energy. However, on Saturday Trump said he had not yet announced a final decision on the matter, while U.S. Secretary of State Marco Rubio said officials needed more time to assess the situation.
Russia's oil production increased by 65,000 barrels per day in September to 8.43 million barrels per day, but remained about 870,000 barrels per day below the level a year earlier, the International Energy Agency reported last week.
"Although the prospect of additional Russian diesel supplies offers some theoretical relief, traders appear far more focused on the ongoing risk of further damage to energy infrastructure in the Persian Gulf region," said Tim Waterer, chief analyst at KCM Trade.