Crude oil prices hit 6-month high of $118
What's the story
Oil prices surged on October 30, amid fears of a possible US military strike against Iran. The surge was fueled by concerns over regional stability and potential disruptions to energy supplies. Brent crude rose to $118 per barrel, a 2.5% increase, while US West Texas Intermediate (WTI) crude gained 2.3% to $104 per barrel.
Market impact
Brent crude hits 6-month high
Brent crude has gained 12% in October, hitting a six-month high. The increase comes despite the fact that oil flows through the Strait of Hormuz have resumed.
However, low inventories and tight supplies of refined products continue to support prices.
The market uncertainty is further fueled by fears of more Houthi attacks and potential US military action against Iran after elections.
Strategic developments
Price surge triggered by potential US military action
The price surge was triggered by a Wall Street Journal report that a senior US military commander had briefed President Donald Trump on possible military options.
This came after an unidentified projectile struck a tanker as it completed its outbound passage through the Strait of Hormuz, highlighting the ongoing threat to shipping.
Conflict escalation
Escalation of attacks on Saudi Arabia
The Saudi-led coalition fighting Yemen's Houthis said it intercepted and destroyed a ballistic missile fired by the group toward Saudi Arabia's eastern region early on Thursday.
This comes after Yemeni government forces reported Houthi attacks on Aden airport and a missile strike targeting Ras Tanura, Saudi Arabia's largest oil refinery.
These incidents mark an escalation in attacks on Saudi Arabia, the world's second-largest crude producer after the US.
Market forecast
Predictions for oil prices vary widely
The uncertainty over the future of this conflict continues to cloud the outlook for oil markets.
JPMorgan analysts have said it's still hard to predict how the war will play out.
Goldman Sachs has warned that if attacks on vessels in the Middle East escalate, oil prices could rise to $120 a barrel. However, if exports return to normal levels, prices could fall toward $80 a barrel.