Energy Crisis Worsens, Oil Tops $110 Briefly on Supply Risk
The global energy crisis worsened as oil prices remained elevated, with Brent topping $110 per barrel on Friday, causing stock prices to plunge sharply.
Oil prices headed for weekly gains on Friday as escalating tensions in the Middle East and a sharp decline in US crude inventories heightened concerns about global supply, while emergency stock releases and prospects of increased Russian fuel supplies limited gains.
International benchmark Brent crude futures for December delivery traded at $105.73 per barrel Friday, up 1% from last Friday’s close of $104.72.
US benchmark West Texas Intermediate (WTI) crude futures for November delivery traded at $97.65 per barrel, up around 6.3% from $91.85 a week earlier.
Escalating clashes between Yemen’s Iran-backed Houthis and Saudi Arabia raised concerns over oil production and shipments in the Middle East, lending support to prices during the week.
Saudi authorities reported intercepting several missiles and drones launched by the Houthis, while debris from intercepted cruise missiles injured four people and damaged homes in Riyadh.
Saudi Arabia’s Energy Ministry also said an administrative building belonging to Saudi Aramco in the eastern city of Dhahran had been targeted, causing a small fire but no casualties.
Meanwhile, security risks in the Strait of Hormuz continued to fuel concerns over supply disruptions.
The UK Maritime Trade Operations (UKMTO) reported that two vessels were struck by unidentified projectiles in separate incidents in the strait on Wednesday.
The Islamic Revolutionary Guard Corps (IRGC) Navy also said a container vessel sank after striking a naval mine while attempting to cross the waterway along what it described as an unauthorized route.
The incidents underscored persistent risks to commercial shipping through the strategic waterway amid the ongoing US-Iran conflict, adding to concerns over potential disruptions to oil flows.
Fresh US sanctions targeting financial networks used to transfer Iranian oil revenues added to the pressure on Tehran’s energy trade.
The US Treasury Department blacklisted 16 individuals and 10 entities, raising concerns that restrictions on Iran’s access to the international financial system could complicate its oil exports.
A larger-than-expected decline in US crude inventories provided further support for oil prices. Data released Thursday by the US Energy Information Administration (EIA) showed that commercial crude inventories fell by approximately 8.6 million barrels in the week ended Oct. 9.
US crude production also declined by 300,000 barrels per day (bpd) to around 13.68 million bpd, while imports fell by 791,000 bpd to 6.05 million bpd.
Attacks on energy infrastructure in the Russia-Ukraine war added to concerns over potential disruptions to global oil and petroleum product supplies.
Ukrainian President Volodymyr Zelenskyy accused Russia of continuing attacks on Ukrainian energy facilities despite a US-announced energy ceasefire. He later said Kyiv would resume strikes on Russian oil refineries.
However, gains were limited by expectations of increased global oil and fuel supplies following a decision to accelerate emergency stock releases and steps to ease certain restrictions on Russian petroleum products.
The International Energy Agency (IEA) said Thursday that member countries had agreed to accelerate the release of approximately 100 million barrels of emergency oil stocks remaining under a collective action launched in March in response to the Strait of Hormuz crisis.
The remaining volumes include more than 20 million barrels of diesel, which the agency said would be released as soon as possible.
The IEA said approximately 330 million barrels had already been released and urged countries with oil production and refining capacity to increase supplies, particularly diesel.
A US decision to temporarily ease restrictions on Russian diesel trade also raised expectations that additional fuel supplies would reach global markets.
The US Treasury Department authorised transactions involving the sale, delivery, offloading and import of Russian diesel through April 7, 2027.
Russian Deputy Prime Minister Alexander Novak said Russia could increase diesel exports to 3.5 million metric tons per month by year-end, potentially easing tightness in global fuel markets.
Reports that Washington was considering easing sanctions on vessels linked to the so-called shadow fleet also weighed on prices by raising expectations of lower shipping costs and greater tanker availability, although no final decision had been announced.
The sharp drop in tech shares came as worries about ballooning debt, high interest rates and rising oil prices all resurfaced.
Brent crude oil, widely considered one of the most important benchmarks in global energy, surpassed $110 per barrel shortly after 2:30 p.m. ET on Friday, its highest level since May. It ended the week at $109.86 per barrel, still its highest closing level since May 19.
U.S. crude oil, which also steers gas prices, jumped 3.5% Friday to close at $101.41 per barrel. It was the first time West Texas Intermediate crude had crossed the $100 threshold, closely watched by both traders and the public, since September.
The continued upward trend in energy prices increases the likelihood that the Federal Reserve will raise interest rates again this year. The Fed already raised rates by 0.25% in September to tame inflation that had risen due to higher oil and gas prices.
Diesel futures also jumped by more than 1% on Friday. The cost of this commercial fuel, critical for farming and other industrial sectors, has risen even faster than that of regular gasoline in recent months.
The steady rise in the price of fuel around the world began this spring, when the U.S. and Israel attacked Iran in late February and triggered the closure of the Strait of Hormuz.
But an escalation of the Russia-Ukraine war in recent months has caused an even more dramatic spike in diesel prices.
Russia has traditionally been one of the world’s largest diesel exporters. But attacks by Ukrainian forces on its energy infrastructure has taken much of its refining capacity offline.
On Friday, another Russian refiner suspended some crude oil operations. The Russian Defense Ministry said Ukraine had “attempted a massive attack on the Ryazan oil refinery.”
Energy assets in Ukraine have also been targeted by Russian strikes.
As the world seeks alternative sources for diesel, there are few clear opportunities to expand diesel production. Refineries in the U.S. and Europe are already running at nearly maximum capacity to churn out as much diesel fuel as possible.
President Donald Trump is intensely focused on the high cost of diesel fuel because of its key role in driving up inflation — a top issue for American voters in the Nov. 3 midterm elections.
Trump has tried multiple actions to lower prices, but those have not resulted in a significant drop in diesel prices. Energy Crisis Worsens, Oil Tops $110 Briefly on Supply Risk
Oil Rises as Iran-Backed Houthis, Saudi Arabia Tensions Escalate
