Brent Tops $111, Then Pulls Back as Middle East Risks Persist

Brent crude climbed above $111 a barrel Tuesday, then fell back to about $108 in early afternoon trading. US crude followed a similar path, briefly topping $100 before easing to about $103. The sharp turn showed how quickly traders are reacting to news about conflict and possible talks in the Middle East. ¹

That volatility followed reports of attacks on ships and claims by Yemen’s Houthi movement that it struck Saudi energy sites. The UK Maritime Trade Operations Center reported an incident involving a tanker and military forces off Oman. Iranian state media said two tankers hit naval mines south of the Strait of Hormuz. Saudi authorities had not confirmed the Houthi claims, and Reuters could not check them independently.^4,12 Before the war, a fifth of the world’s oil and gas passed through the strait. ²

The Strait of Hormuz matters because danger there can raise fuel shipping costs, even when oil keeps flowing. Middle East oil flows recently averaged just over 24 million barrels a day, above their pre-war average, helped by Saudi pipeline exports. But tanker crossings through the strait remain well below normal.² Fatih Birol of the International Energy Agency warned that crude prices alone hide the strain. Diesel has doubled since before the war, and he sees no clear path to normal markets in 2027.¹⁴ Higher costs can reach drivers and businesses around the world because oil is traded globally. ⁴

The diesel shortage could worsen as winter demand rises and refineries undergo planned maintenance, Birol warned.¹⁴ Meanwhile, traders are also weighing Russian fuel supplies after US measures eased some limits, and Washington says it may let sanctioned tankers carry legal oil.^1,12 These moves could help keep fuel moving, but they do not remove the risks of attacks or renewed US-Iran conflict. Traders will keep watching events around the Strait of Hormuz and the next steps in US-Iran talks. ^1,2