Oil above $110 as Middle East tensions escalate - Sarmad

Oil prices rose in Asian trading on Tuesday, with Brent crude hovering near its five-month high, driven by escalating geopolitical risks in the Middle East following the Houthi announcement of attacks on targets in Saudi Arabia, alongside reports of ships being targeted in the Gulf.

Brent crude futures climbed 55 cents, or 0.5 percent, to $110.10 per barrel by 3:19 p.m. GMT, after closing at $110.70 in the previous session, marking the highest level since May 20. U.S. West Texas Intermediate (WTI) crude for November delivery, which expires on Tuesday, rose 0.24 percent to $103.91 per barrel, while the most active December contract gained 39 cents, or 0.4 percent, to $98.93 per barrel.

The persistence of prices at these levels reflects the market’s retention of a risk premium linked to the possibility of widening security disruptions and their impact on energy supplies and shipping movements. Analysts at ING said prices remain supported by geopolitical risks, warning that the risk premium could gradually recede if oil flows continue uninterrupted, although there are no current signs of this.

According to Kpler, a ship-tracking firm, at least 18 vessels were attacked over a two-week period, keeping concerns about navigation safety and supply continuity alive.

The announced attacks have heightened fears about regional stability and the risk of damage to energy infrastructure, as oil prices exceed $100 per barrel.

In the United States, an initial Reuters poll showed that crude oil and product inventories likely declined last week, a factor that could support prices if confirmed by official data.

On the other hand, the prospect of increased Russian supplies remains under scrutiny following an executive order signed by U.S. President Donald Trump on Friday, which included exemptions from U.S. sanctions and tariffs related to Russia, including tariffs on goods and sanctions linked to the purchase of its energy products. However, Trump said on Saturday that he had not made a final decision on the matter, while Foreign Secretary Marco Rubio clarified that officials need more time to assess the situation.

The International Energy Agency (IEA) reported last week that Russia’s crude oil production rose by 65,000 barrels per day in September to 8.43 million barrels per day, but remained approximately 870,000 barrels per day below its level a year ago.

Tim Waterer, chief analyst at KCM Trade, said the possibility of increased Russian diesel supplies could theoretically provide an outlet for the market, but traders are focusing more on the risks of further damage to energy infrastructure in the Gulf region.