Global oil prices have surged past $110 per barrel as escalating geopolitical tensions in the Strait of Hormuz and Ukraine threaten energy supply chains. Attacks on commercial ships near Hormuz and missile strikes in Saudi Arabia, coupled with Ukraine’s threat to retaliate against Russian refineries, have driven up crude prices significantly.
This volatile situation has also led to a sharp increase in diesel prices, with analysts warning of further market instability if conflicts persist.
Oil Surges Past $110 as Global Tensions Escalate in Hormuz and Ukraine
Rapidan Energy’s McNally: Three conflicts are impacting energy flows and fixed energy infrastructure
Crude oil prices experienced a significant surge on Friday, with Brent futures hitting a session high of $110 per barrel for the first time since May, before settling at $109.86, marking a 3.7% increase. This sharp rise is attributed to escalating geopolitical tensions, including heightened attacks in the Strait of Hormuz, missile strikes by Houthi militants in Saudi Arabia, and Ukraine's vow to retaliate against Russian refineries.
U.S. West Texas Intermediate (WTI) also saw substantial gains, rising 3.5% to settle at $101.41 per barrel. WTI climbed over 10% for the week, while Brent advanced nearly 5%.
The situation in the Middle East intensified as Saudi Arabia reported intercepting several missiles over the Red Sea, including one aimed at the Yanbu oil export terminal. Additionally, three drones were neutralized in the kingdom's Riyadh and southern regions. These incidents follow repeated attacks by Iran-allied Houthi militants in Yemen, with an oil giant Aramco administrative building in Dhahran being hit on Tuesday. The Houthis' earlier attack on Riyadh's international airport on October 10 resulted in casualties.
In the critical Strait of Hormuz, at least nine commercial ships have been targeted since Sunday. Iran is accused of sinking the container ship GFS Pride on Wednesday, prompting condemnation from U.S. Central Command. The crew was safely evacuated. The International Maritime Organization reported that these attacks have led to three seafarers being injured and two missing this week.
Crude exports through the Strait of Hormuz, a vital chokepoint for global oil supply, have seen a pullback. Shipments stood at 9.4 million barrels per day for the week ending Wednesday, approximately 70% of pre-conflict levels, according to energy researcher Kpler.
Meanwhile, the proposed "energy ceasefire" between Ukraine and Russia, an initiative championed by President Donald Trump, has rapidly dissolved. Despite the supposed truce, Russia has continued its attacks on Ukrainian infrastructure. In response, President Volodymyr Zelenskyy has declared Kyiv's intention to resume strikes on Russian refineries.
The ongoing conflicts have had a notable impact on diesel prices, which have surged over 70% year-on-year, averaging $6.33 a gallon in the U.S. on Friday, according to AAA data. This increase is linked to Ukraine's attacks on Russian refineries and the disruptions to energy infrastructure in the Middle East.
Adding to the upward pressure on U.S. crude oil prices was a significant draw of over 8 million barrels in commercial inventories for the week ending October 9. This decline was primarily due to production shutdowns along the Gulf Coast caused by Hurricane Isaias, as reported by the Energy Information Administration.
Global energy markets are reacting to escalating conflicts in the Middle East and Eastern Europe.
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