Brent crude briefly touched $110 a barrel for the first time since May before settling slightly lower, as traders balanced escalating geopolitical tensions in the Middle East against measures designed to bolster supply. U.S. West Texas Intermediate also rallied to levels not seen in weeks, reflecting broad risk premia in oil markets.
On settlement, Brent was up $3.94, or 3.7%, at $109.86 - its strongest close since May 19. U.S. crude finished $3.44, or 3.5%, higher at $101.41, the highest closing level since September 17. Over the course of the week, Brent rose 4.9% and WTI gained 10.4%.
Market research firm Energy Aspects said early losses in both benchmarks reversed as concerns over fresh escalation returned amid reports of possible attacks on Saudi energy infrastructure. The firm noted that Israeli reports indicating Iran may be preparing a pre-emptive strike - based on unusual military movements cited by Western intelligence - remain unverified, but that these developments strengthen the view that sustained escalation risks will continue to support oil prices.
Regional hostilities have included a Saudi-led coalition claim that it intercepted and destroyed a ballistic missile launched toward the Red Sea city of Yanbu. The port is a key element in Saudi efforts to route exports while bypassing the Strait of Hormuz, and consultants at Rapidan Energy Group said initial reports indicated no damage to Yanbu's infrastructure.
Traders also pointed to a rise in attacks in the vicinity of the Strait of Hormuz over the prior 10 days. Iran has reportedly said it would step up strikes in response to a U.S. blockade of its ports and tougher sanctions introduced last month, a development that market participants see as complicating flows through vital shipping lanes.
Analysts at Kpler reported that "intensified Iranian attacks drove Gulf crude flows sharply lower," and added they expect a slower and more uneven recovery in through-Strait flows without a comprehensive political settlement.
At the same time, disruption has touched Russian refining capacity. Ukrainian forces struck a Russian oil refinery on Thursday after President Volodymyr Zelenskiy said Kyiv was abandoning a ceasefire that had covered energy sites - a ceasefire that, according to the provided account, had been announced by U.S. President Donald Trump. Two industry sources told Reuters that Russia's Ryazan oil refinery suspended operations at a primary crude distillation unit following a drone attack in the region on Thursday.
Market participants cited those developments as a factor in concerns about how much diesel Russia can supply. "Conflict in the Middle East still keeps coming back and I think it's questionable how much diesel fuel Russia can actually deliver to the markets. Those two factors are just continuing to have traders be buyers," said Dennis Kissler, senior vice president of trading at BOK Financial, reflecting market sentiment about supply reliability.
Policy responses aimed at easing tightness in fuel markets were also underway. The International Energy Agency agreed to release more than 20 million barrels of fuel to the market, and the U.S. Department of Energy issued a request for proposal on Friday for an exchange of up to 17 million barrels of crude oil from the Strategic Petroleum Reserve. Washington had previously agreed to loan 172 million barrels from the SPR as part of a broader IEA-coordinated effort in which about 30 countries aimed to release 400 million barrels from reserves globally.
Market moves earlier in the week included a U.S. draw on crude stocks due in part to hurricane-related production shut-ins. Separately, reports that the United States was considering plans to ease restrictions on the global "shadow fleet" of tankers coincided with upward pressure on prices and helped push U.S. crude prices more than 3% higher on Thursday.
Overall, traders said the combination of heightened geopolitical risk around key shipping routes, refinery outages, and coordinated releases from strategic reserves left the oil complex sensitive to further developments, particularly around diesel availability and tanker operations.
Key points
- Brent briefly hit $110 and settled at $109.86, the strongest close since May 19; WTI closed at $101.41, the highest since September 17.
- Escalation risks in the Middle East, attacks near the Strait of Hormuz, and a missile interception near Yanbu underpin supply concerns and price support.
- Policy actions - including IEA fuel releases and a potential exchange from the U.S. Strategic Petroleum Reserve - aim to alleviate market tightness, but refinery outages and tanker restrictions remain key variables for energy, shipping, and refining sectors.
Risks and uncertainties
- Ongoing geopolitical escalation in the Middle East could further interrupt maritime routes and crude flows, particularly through the Strait of Hormuz - impacting energy and shipping sectors.
- Uncertainty over the extent of diesel supplies that Russia can deliver amid refinery attacks and operational suspensions may pressure refined product markets and refining margins.
- Potential U.S. measures on the "shadow fleet" of tankers and recent hurricane-related production disruptions introduce policy and weather-related execution risks for crude availability and logistics.
Market participants and policymakers continue to monitor developments closely, weighing the interplay between supply-side shocks and coordinated reserve releases as they assess near-term implications for prices and flows.