Oil Strengthens as Middle East Risks Push Prices Higher

Crude oil prices strengthened again in Tuesday’s trading (October 20), with Brent rising 0.50% to US$110.10 per barrel—nearing its highest level in five months. Meanwhile, WTI for November delivery climbed 0.24% to US$103.91 per barrel. The price increase was primarily driven by a geopolitical risk premium following a rise in attacks on energy infrastructure and vessels in the Gulf region.

Attacks by the Houthi group on various energy facilities, airports, and military targets in Saudi Arabia have heightened concerns regarding regional stability. While these claims of attacks have not been independently verified, reports of at least 18 vessels being targeted over the past two weeks have kept the market on high alert for potential disruptions to energy supply chains.

Supply risks are a growing concern, as the Gulf region serves as a critical artery for global oil trade. While oil flows continue without major interruptions, the risk premium could gradually diminish; however, there are currently no clear signs that these risks have subsided.

In the United States, the market is also awaiting crude inventory data, which is expected to show a decline. Should a drop in stocks be confirmed, it could provide further support for oil prices by signaling tighter domestic supply in the U.S.

Meanwhile, U.S. policy regarding Russian energy remains a point of interest. President Donald Trump previously signaled potential leniency regarding certain sanctions and tariffs related to Russia, though a final decision remains under review. Any additional supply of Russian oil or diesel could potentially ease price pressures, though the market currently appears more focused on the risks posed to energy infrastructure in the Gulf.

Newsmaker Analysis: Oil fundamentals remain broadly bullish as the geopolitical risk premium stays elevated. As long as attacks on energy facilities and vessels persist, oil prices are likely to remain at high levels. However, if the flow of supply from the Gulf region remains steady and Russian supply increases once again, the risk premium could diminish, creating room for a price correction. (asd)

Source: Newsmaker.id