Oil
Oil nears $110 on Middle East tensions and Russian supply risks
Global crude benchmarks rose sharply as escalating conflicts in the Middle East and renewed attacks on Russian refining infrastructure tightened market supplies.
Key points
- Brent crude futures climbed to $109.86 per barrel, reaching their highest level since May.
- Concerns over Middle East supply routes grew following reported attacks near the Strait of Hormuz and Saudi infrastructure.
- International agencies moved to release strategic reserves to help offset potential supply shortfalls.
What happened
Global crude prices increased significantly, with Brent touching $110 a barrel for the first time since May, according to Reuters reporting. Brent crude futures settled $3.94 higher at $109.86, while US West Texas Intermediate finished up $3.44 at $101.41.
Market participants responded to mounting geopolitical risks, including unverified reports of potential pre-emptive strikes in the Middle East and intercepted ballistic missiles near Saudi Arabia's Red Sea port of Yanbu. Concurrently, Kpler analysts noted that intensified attacks around the Strait of Hormuz have reduced Gulf crude flows.
In Eastern Europe, a drone attack caused Russia's Ryazan oil refinery to suspend operations at a primary crude distillation unit. This followed statements from Kyiv abandoning a previous energy site ceasefire.
Why it matters
Persistent security risks in major energy-producing regions directly impact global market stability and fuel costs. To counter tightening supplies, the International Energy Agency agreed to release over 20 million barrels of fuel. Additionally, the United States Department of Energy requested proposals for an exchange of up to 17 million barrels from the Strategic Petroleum Reserve.
Traders remain focused on the combined pressures of Middle Eastern logistics disruptions and uncertainty surrounding Russian diesel exports to international markets.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Crude benchmarks move budgets, currencies and inflation in producer and importer countries alike. For economies such as Nigeria, where fuels dominate exports, production and refining decisions move the whole economy.
43.1% of Russia’s merchandise exports were fuels in 2021Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
