Oil prices experienced an uptick on Friday, following a 4% increase that brought them to a five-month high in the preceding session. This rise was influenced by Houthi attacks on leading exporter Saudi Arabia, which heightened concerns regarding potential disruptions to energy supplies. Brent crude futures increased by 50 cents, or 0.45%, reaching $114.02 per barrel, whereas US West Texas Intermediate crude saw a rise of 40 cents, or 0.42%, settling at $100. WTI appeared poised to conclude a two-week winning streak with a weekly decline. Brent, which concluded at its peak since May 4 on Thursday, was poised to achieve a third consecutive week of gains. Saudi Aramco initiated the evacuation of its headquarters in Dhahran, located on the Gulf near Bahrain, on Thursday as hostilities escalated between the world’s largest crude exporter and the Yemen-based Houthis. Clashes between the Iran-aligned Houthis and a Saudi-led coalition backing Yemen’s internationally recognised government have persisted, with the group making advances toward Bab el-Mandeb, a critical shipping chokepoint at the entrance to the Red Sea. On Wednesday, Russia announced its readiness to resume US-mediated discussions with Ukraine next month, subsequent to President Vladimir Putin’s meeting with US envoy Steve Witkoff in St Petersburg.
Ukrainian President Volodymyr Zelenskiy expressed optimism regarding the prospect of negotiations, marking the first discussions since February, anticipated to occur in early November. In 2025, Russia ranked as the third-largest producer of crude oil globally, trailing only the United States and Saudi Arabia, as indicated by US energy data. Sanctions implemented to exclude Russian energy from global markets in response to Moscow’s invasion of Ukraine in 2022 have resulted in an increase in oil prices. Source reported that the US and Israeli militaries have formulated detailed strategies for potential renewed strikes against Iran following the American midterm elections, according to US officials and others informed about the discussions. Preparations for a brief yet intensive operation are advancing, as both militaries enhance their exercises and conduct aircraft flights over Iraq to rehearse strike manoeuvres. US Defence Secretary Pete Hegseth met with Israeli Prime Minister Benjamin Netanyahu in Israel this week to discuss recent military actions, as reported by US officials.
Potential targets encompass Iran’s energy infrastructure, nuclear facilities, and missile and drone arsenal. Some officials contend that another significant wave of attacks could drive Iran’s economy to the edge and force Tehran to consider diplomatic concessions following nearly eight months of conflict. Uncertainty regarding the trajectory of the conflict persists, casting a shadow over the forecast for oil prices. JPMorgan analysts indicated that the future course of the war continues to present significant modelling challenges. At the outset of the conflict, the bank had anticipated that the US administration would refrain from surpassing specific economic thresholds. Seven months later, numerous thresholds had been surpassed, yet a definitive exit strategy continued to be unattainable.
The risk of additional supply disruptions has bolstered expectations for elevated oil prices. Daan Struyven noted that recent attacks have highlighted the potential for shipping disruptions to proliferate and escalate. Goldman Sachs has delineated a situation where oil prices may ascend to $120 per barrel should assaults on vessels in the Middle East intensify. Conversely, a return to normal export levels could lead to a decline in prices toward $80 a barrel. Struyven indicated that shipping risks have emerged as a crucial element affecting oil prices, noting that the bank anticipates considerable upside potential for crude. Goldman Sachs anticipates an uptick in natural gas and refined fuel prices, attributing this to supply shocks that are likely to exert a more pronounced effect on gas and refined products compared to crude oil.
