Brent Crude Touches $110 for First Time Since May

The price of a barrel of Kuwaiti crude oil fell by $1.04 to $103.13 per barrel in Friday trading, compared to $104.17 in Thursday trading, according to the price announced by the Kuwait Petroleum Corporation.

In global markets, Brent crude touched $110 per barrel on Friday for the first time since May, supported by fears that escalating tensions in the Middle East could further strain supplies. Investors are also assessing the volume of diesel supplies that Russia may be able to pump into global markets.

Brent crude futures rose by $3.94, or 3.7 percent, to settle at $109.86 per barrel, marking the highest settlement level since May 19.

US West Texas Intermediate (WTI) crude futures also rose, gaining $3.44, or 3.5 percent, to settle at $101.41 per barrel, the highest level since the settlement on September 17.

In a note, Energy Aspects research and consulting firm stated, “WTI and Brent crude have recovered some of their previous losses as fears of escalating tensions resurface amid rumors of attacks on energy infrastructure in Saudi Arabia.”

“Although these reports have not been verified, these developments reinforce our view that ongoing escalation risks will support oil prices,” the note added.

Concerns over supplies have intensified with increased attacks near the Strait of Hormuz over the past ten days. Iran stated it is intensifying its strikes in response to the US blockade of its ports and stricter sanctions imposed last month.

Analysts at Kpler, a shipping tracking firm, said in a Thursday report, “The intensification of Iranian attacks has led to a sharp decline in crude flows from the Gulf,” adding that they expect a slower and more uneven recovery in transit through the Strait of Hormuz in the absence of a comprehensive political agreement.

Ukraine bombed a Russian oil refinery today, following President Volodymyr Zelenskyy’s announcement that Kyiv would abandon a ceasefire that included energy facilities, which US President Donald Trump had announced. Zelenskyy also criticized Trump’s willingness to reach agreements with Moscow.

Two industry sources told Reuters that the Ryazan oil refinery in Russia halted operations in its crude distillation unit following a drone attack in the area today.

The International Energy Agency (IEA) also approved on Friday the release of more than 20 million barrels of fuel into the market.

The US Department of Energy announced on Friday that the United States had also issued a request for bids to swap up to 17 million barrels of crude oil from the US Strategic Petroleum Reserve (SPR).

The move will be part of a global agreement reached by the United States in March, aimed at controlling fuel prices affected by the US conflict with Iran.

At that time, Washington agreed to lend 172 million barrels of oil from the Strategic Petroleum Reserve as part of a broader agreement with about 30 countries in the IEA to withdraw 400 million barrels from reserves worldwide.

The United States had previously offered to release the final tranche of the March agreement in June, but later revealed that month that companies, which were asked to pay premiums of up to 24 percent for additional barrels of crude oil returned to the Strategic Petroleum Reserve, had agreed to withdraw only about 500,000 barrels.

Despite this, the decline in oil prices during the third quarter reduced profits by $1.3 billion, while timing effects amounted to approximately $2.5 billion.

The company explained that timing effects arise when existing derivative contracts are valued using prevailing prices at the end of the financial period, while the actual shipments linked to them remain in inventory.

These shipments do not affect profits until the related transactions are completed.

Preliminary data also showed the impact of developments in the Middle East, including losses from hedging settlements that were not offset by actual shipments due to supply disruptions in the region.

U.S. President Donald Trump exempted Russian energy exports from massive tariffs stipulated in a law signed last month, after these measures had obstructed his efforts to lower diesel prices ahead of the U.S. midterm elections.

Trump relied on an exemption clause included in the law, which was championed by the late Senator Lindsey Graham to punish Russia for its invasion of Ukraine. The law also established a legal framework for sanctions against Moscow and expanded their scope.

Trump stated in an executive order issued late Friday: “I hereby exempt the application of the sanctions, restrictions, and tariffs set forth in the Graham Act. I have submitted to Congress a certification that issuing this exemption at this time serves the national interest of the United States.”

The directive keeps the tariffs legally in place but suspends their enforcement, meaning Trump can apply them later if he chooses.

The action gave Trump a 30-day deadline to impose 100% tariffs on all goods imported from the top five buyers of Russian crude oil. It also mandated sanctions on a large number of Russian entities and imposed a 500% tariff on all U.S. imports of Russian energy products. The deadline was set to expire today (October 18).

These provisions conflict with a plan Trump announced last week to work with Russian President Vladimir Putin to inject Russian diesel supplies into global markets.

The U.S. president is seeking to lower diesel prices in the United States, which are hovering at record levels, weeks before the November 3 elections.

The tariff exemption could trigger a new wave of criticism within Congress, including from many Republicans who were angered by Trump’s decision regarding Russian diesel exports.

A bipartisan group of senators sent a letter this week urging Trump to reverse his agreement with Putin and enforce the provisions of the “Graham Act.”

Suspending the law’s enforcement also avoids the risk of a dispute with the largest buyers of Russian energy products: China, India, and Turkey.

Graham, a Republican from South Carolina and a long-time prominent supporter of Ukraine, drafted the bill before his death in July, and its passage was viewed as a tribute to him.