Diplomatic efforts continued as Iranian President Masoud Pezeshkian met with Pakistan’s army chief, Field Marshal Asim Munir, to discuss mediation and regional developments. However, continued attacks by Yemen’s Iran-aligned Houthis on Saudi energy, airport and military targets kept concerns about regional stability and potential supply disruptions elevated. Reports of at least 18 vessel attacks over two weeks further supported a geopolitical risk premium in oil prices, which remained above $100 a barrel for Brent and the expiring November WTI contract.

Meanwhile, Russian diesel shipments began returning to traditional destinations following the temporary suspension of U.S. sanctions and the lifting of an export ban, with tankers signaling voyages to Turkey and Brazil. U.S. energy officials also said the government was working with domestic refiners to increase diesel production and encouraging shuttered refineries to reopen. Traders were also awaiting U.S. inventory data, with analysts expecting crude oil and refined product stockpiles to have declined during the week ended October 16.

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The security situation in the Middle East continues to threaten oil production and transportation. Yemen’s Iran-aligned Houthis claimed attacks on Saudi energy, airport and military facilities, including an Aramco facility in Yanbu and the Shaybah oilfield. Saudi authorities had not immediately confirmed the claims, and the reports could not be independently verified. Separately, Iran’s Revolutionary Guards said an oil tanker caught fire and exploded after striking a naval mine in the southern Strait of Hormuz.

Crude flows through the region fell to a seven-day average of approximately 8.5 million barrels per day last week, down from more than 20 million barrels per day the previous week, according to analytics firm Kpler. The company also reported at least 10 confirmed incidents involving commercial vessels during the week, highlighting the continued risks facing energy shipments.

Additional Russian fuel exports could provide some relief, but uncertainty remains. President Donald Trump signed an executive order waiving certain sanctions and tariffs related to Russian energy exports. Analysts said the waiver could allow additional Russian fuel to reach global markets, although uncertainty over its implementation and duration makes it difficult to determine how much supply will increase. The measure does not resolve the physical supply disruptions and shipping risks in the Strait of Hormuz.

Meanwhile, a Reuters survey found that OPEC oil production increased in September, led by gains in Saudi Arabia and Iraq. However, additional production may not fully offset supply and transportation disruptions across the Middle East.

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Supply concerns intensified following reports of potential attacks on Saudi energy infrastructure and the interception of a ballistic missile headed toward Yanbu, a key Saudi Red Sea port used to bypass the Strait of Hormuz. Attacks around the Strait of Hormuz have increased over the past 10 days, with Iran escalating strikes in response to the U.S. blockade of its ports and tougher sanctions. Analysts warned that crude flows through the region could recover slowly and unevenly without a comprehensive political agreement.

Additional uncertainty came from disruptions to Russian oil refining after Ukraine attacked the Ryazan refinery, forcing the suspension of operations at a primary crude distillation unit. Concerns about Russia’s ability to supply diesel, combined with continued Middle East tensions, supported buying in oil markets. To help ease supply pressures, the International Energy Agency (IEA) agreed to release more than 20 million barrels of fuel, while the United States announced a request for proposals to exchange up to 17 million barrels of crude oil from the Strategic Petroleum Reserve (SPR).

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U.S. crude inventories fell by 8.6 million barrels to 415.6 million barrels for the week ended October 9, according to the Energy Information Administration (EIA), far exceeding analysts’ expectations for a draw of 288,000 barrels. The larger-than-expected decline helped support WTI prices, while gasoline inventories increased and distillate inventories declined.

Geopolitical tensions continued to underpin the oil market as attacks on ships near the Strait of Hormuz intensified and conflict between Saudi Arabia and Yemen’s Houthis escalated. Ukraine also resumed attacks on Russian oil refineries, adding to concerns about potential supply disruptions. Meanwhile, the International Energy Agency (IEA) agreed to accelerate the release of more than 20 million barrels of diesel, along with remaining oil from its record emergency reserves release pledged in March, as countries continue efforts to increase supply and ease elevated energy prices.

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Brent crude futures rose 37 cents, or 0.35%, to settle at $106.06 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 95 cents, or 1.01%, to settle at $95.09 a barrel, its highest closing price in three weeks.

Tensions intensified after Iran-backed Houthi forces attacked an administrative building belonging to Saudi Aramco in Dhahran, causing a limited fire. Iran has also indicated that it is changing its tactics to increase pressure on shipping, raising concerns about additional attacks on vessels moving through the region. A container ship reportedly sank after striking a naval mine south of the Strait of Hormuz, following separate reports of vessels being hit by projectiles within the waterway.

Although Middle Eastern crude exports have recovered significantly, the increase does not necessarily reflect higher overall production. Some of the additional supply represents oil being redirected to international markets rather than regional refineries. Gulf oil flows excluding Iran exceeded 81% of prewar levels in September, supported by a recovery in Saudi exports, while Iranian exports fell to zero amid a U.S. blockade.

Additional Russian diesel supplies could help ease pressure on global fuel markets, following an agreement announced by President Trump to allow more Russian diesel exports. However, continued uncertainty surrounding the volume and timing of those shipments may limit their ability to offset ongoing supply disruptions. The International Energy Agency reported that Russian crude production increased by 65,000 barrels per day in September to 8.43 million barrels per day, although output remained 870,000 barrels per day below year-earlier levels.

The IEA also reported that crude exports from Middle Eastern Gulf producers increased by 4.4 million barrels per day in September, reaching approximately 75% of prewar levels. Despite the recovery, renewed attacks on energy infrastructure and shipping routes continue to threaten the stability of global supplies.

Markets are also awaiting the latest U.S. inventory reports from the American Petroleum Institute and the Energy Information Administration. The reports are expected Wednesday and Thursday, respectively, following a one-day delay associated with Monday’s federal holiday.

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Brent crude futures fell 96 cents, or 0.9%, to settle at $105.69 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 40 cents, or 0.4%, to settle at $94.14 a barrel. Brent’s settlement on Monday had been its highest since September 15, while WTI reached its highest closing price since September 24.

Longer-dated crude contracts continued to climb, with WTI futures for calendar 2027 reaching a record $84 a barrel for the 12th consecutive session. Brent futures for calendar 2027 also reached a record $90 a barrel on Monday, marking a fourth consecutive session of record highs.

Expectations for additional Russian diesel exports remain a focus as governments attempt to address tight fuel supplies and elevated prices. President Trump said the diesel shipments from Russia were intended for international markets rather than the United States. However, uncertainty surrounding the agreement and continued disruptions to global refining capacity have kept diesel prices under pressure, with U.S. diesel futures rising approximately 5% on Tuesday.

Meanwhile, escalating hostilities in the Middle East continue to threaten regional energy infrastructure and shipping routes. Saudi Arabia launched operations in Yemen after Iran-backed Houthi forces intensified their attacks, while recent tanker incidents near the Strait of Hormuz have raised concerns about the security of oil shipments. Approximately 20% of global oil supplies passed through the strait before the war with Iran began in February.

Despite these risks, OPEC+ crude production increased sharply in September, driven in part by higher Saudi Arabian output. Additional production could help offset some supply disruptions, although ongoing attacks and uncertainty over shipping routes remain significant concerns for the global oil market.

OPEC also lowered its forecast for global oil demand growth in 2026 for the sixth consecutive month while raising its outlook for 2027. The organization cited the need to replenish inventories depleted during the conflict with Iran, underscoring the continued strain on global energy supplies.

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Brent crude futures rose $1.93, or 1.8%, to settle at $106.65 a barrel, marking their highest closing price since September 15. U.S. West Texas Intermediate (WTI) crude gained $1.89, or 2%, to settle at $93.74 a barrel.

Attacks by Iran-backed Houthi forces against Saudi Arabia have heightened concerns about the security of energy infrastructure in one of the world’s largest oil-producing regions. Additional tanker attacks near Oman and within the Strait of Hormuz have also increased uncertainty surrounding the recovery of Middle Eastern oil exports. These developments threaten to reverse some of the progress made in restoring regional supply flows.

The Strait of Hormuz remains a critical risk for global energy markets, with continued attacks raising questions about how reliably oil shipments can move through the region. Although Middle Eastern exports improved in September, renewed security concerns have increased the possibility of further disruptions and helped support crude prices.

In the United States, energy companies are working to restore offshore production following Hurricane Isaias, which made landfall over the weekend. Major producers are redeploying personnel and assessing their platforms as operations recover from the storm.

Meanwhile, expectations for additional Russian diesel exports have weighed on refined fuel prices. President Trump said Russia would supply more than 300,000 metric tons of diesel to U.S. and global markets, with additional volumes expected later. Russia has also partially lifted restrictions on diesel exports, potentially adding approximately 3.7 million barrels to international markets. However, reduced Russian refining capacity could limit the impact of these additional supplies.

Efforts to reduce energy-related tensions between Russia and Ukraine have also drawn attention after Trump announced a ceasefire covering energy infrastructure. Ukraine subsequently accused Russia of violating the agreement, leaving uncertainty over whether the arrangement will meaningfully reduce disruptions to energy production and exports.

The International Energy Agency is encouraging member countries to accelerate previously pledged emergency stock releases, particularly diesel, and to consider whether further releases are necessary. While these measures could help ease fuel shortages, continued geopolitical tensions and threats to oil transportation remain significant factors supporting crude prices.

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Brent crude futures rose 44 cents, or 0.42%, to settle at $104.72 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 36 cents, or 0.39%, to settle at $91.85 a barrel.

Comments from President Trump regarding progress in discussions with Iran initially pressured crude prices. Trump also indicated that an announcement concerning diesel was forthcoming and said he was considering suspending the federal gasoline tax. However, uncertainty surrounding the conflict and continued risks to oil shipments limited the market’s reaction. Both Brent and WTI were positioned to finish the week higher.

The Strait of Hormuz remains a major concern for energy markets, as the waterway normally handles approximately 20% of global oil and fuel shipments. Although diplomatic efforts could eventually ease restrictions on shipping, the U.S. continues to impose economic sanctions on Iran, and the potential for further disruptions remains elevated.

Additional pressure on refined fuel markets could come from China, the world’s largest oil importer, which plans to resume refined fuel exports following a brief suspension during its Golden Week holiday. Meanwhile, the ongoing conflicts involving Iran and Russia and Ukraine continue to disrupt supplies of gasoline, jet fuel and diesel, keeping global fuel markets tight.

Hurricane Isaias is providing further support to crude prices as energy companies reduce offshore operations in the Gulf of Mexico. Approximately 1.3 million barrels per day of U.S. Gulf crude production had been shut in as of Thursday, representing 62.9% of current output. Further production losses could add upward pressure to prices if the storm continues to disrupt offshore operations and energy infrastructure.

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Brent crude futures rose $4.08, or 4.1%, to settle at $104.28 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $3.21, or 3.6%, to settle at $91.49 a barrel.

Oil prices were supported by renewed concerns that the conflict with Iran could lead to additional supply and shipping disruptions. Prices pulled back from their highs after President Trump said the U.S. was having productive discussions with Iran and would not attack the country before the November 3 midterm elections. Iran is also reviewing a U.S. proposal concerning the Strait of Hormuz, which could potentially reopen the key shipping route within seven days.

Despite the possibility of renewed negotiations, the U.S. imposed additional sanctions on Iran targeting individuals, networks and 17 vessels involved in transporting Iranian crude, petroleum products and petrochemicals. Tensions also remain elevated around Saudi Arabia, with France and Saudi Arabia examining options to protect the Yanbu oil terminal as fighting involving Iran-backed Houthi forces continues.

Supply concerns remain particularly focused on the Strait of Hormuz, where tanker attacks increased last week to their highest level since the war began. The waterway normally handles shipments equivalent to approximately 20% of global oil and fuel supplies, making continued disruptions a significant risk for the global market.

The market is also dealing with a major weather-related disruption in the United States. Hurricane Isaias is approaching the U.S. Gulf Coast and has already forced energy companies to shut in approximately 1.3 million barrels per day of crude oil production, representing about 62.9% of current Gulf of Mexico output.

With Middle Eastern supply and shipping already under pressure, the loss of additional U.S. production has added another layer of uncertainty to the crude market and helped push prices sharply higher on Thursday.

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Brent crude futures fell 38 cents, or 0.38%, to settle at $100.20 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $1.16, or 1.3%, to settle at $88.28 a barrel.

The IEA said previously announced emergency stock releases could be brought to market more quickly, potentially putting around 100 million barrels into the market. France also plans to release 10 million barrels of diesel from its strategic reserves as governments work to ease tight fuel supplies and record-high prices.

The latest EIA data provided some additional support to crude prices, with U.S. crude inventories falling by 3.2 million barrels to 424.1 million barrels during the week ended October 2. Analysts had been expecting a 1.7-million-barrel increase. Distillate inventories also declined, while gasoline stocks increased.

Supply concerns remain a major factor in the market. Fighting involving Iran-backed Houthi forces continued in Yemen, including an attack on Aden’s international airport, while the broader conflict in the Middle East continues to threaten regional energy infrastructure and exports. Ongoing attacks involving Russia and Ukraine are also affecting energy markets, with strikes on Russian oil facilities adding further pressure to global fuel supplies.

The approaching storm in the Gulf of Mexico is creating another potential supply disruption. Forecasters expect the storm to become the first Atlantic hurricane of 2026 and potentially affect oil and natural gas operations along the U.S. Gulf Coast. The Gulf currently produces approximately 2.05 million barrels of crude oil per day, or about 15% of total U.S. production.

With geopolitical risks already affecting global energy markets, the possibility of Gulf production and refining disruptions adds another layer of uncertainty. Estimates suggest approximately 11.2 million barrels of oil production could be affected over the course of the storm.

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