Oil Price Today Rises Above $110 as Middle East Conflict Revives Supply Fears

Key Takeaways

• Brent crude climbed 1.1% to approximately $110.06 per barrel, while WTI advanced 1% to $98.08.
• Fresh attacks on Saudi infrastructure and vessels near the Strait of Hormuz renewed fears of further supply disruptions.
• Persian Gulf exports have recovered close to prewar levels, but attacks, sanctions and elevated shipping costs continue to support a substantial geopolitical premium.
• The International Energy Agency expects the global oil market to remain in deficit through the end of 2026.
• Sustained oil prices above $110 could reinforce inflation and keep global central banks cautious about lowering interest rates.

The oil price today rose above $110 per barrel as escalating attacks across the Middle East revived concerns that crude production and shipping routes could face another major disruption.

Front-month Brent crude futures gained approximately 1.1% to $110.06 per barrel during Asian trading on Thursday. West Texas Intermediate futures increased 1% to $98.08, recovering after a volatile week dominated by geopolitical headlines and uncertainty surrounding Persian Gulf exports.

The latest increase leaves Brent substantially above its 50-day and 200-day moving averages, indicating that the broader upward trend remains intact despite occasional declines linked to ceasefire negotiations and improving tanker traffic.

Source from: https://tradingeconomics.com/commodity/brent-crude-oil

Attacks on Saudi Infrastructure Increase Supply Risks

The immediate catalyst was a new series of attacks involving Saudi infrastructure.

An attack on King Fahd International Airport in Dammam killed one person, injured eight and forced flights to divert from the area. Saudi authorities did not immediately identify the party responsible, although the incident followed a series of attacks linked to Iran-backed Houthi forces.

Saudi Arabia’s Energy Ministry also reported that debris from an intercepted drone struck an Aramco-operated oilfield, killing two foreign workers and injuring two others.

Previous attacks have targeted shipping, airports and Aramco facilities, including an administrative building in the country’s Eastern Province. The United States subsequently ordered some diplomats and family members of government employees to leave Saudi Arabia because of deteriorating security conditions.

Saudi Arabia is one of the world’s largest crude exporters and holds a significant share of global spare production capacity. Even limited damage can increase oil prices because traders must account for the possibility that future attacks could affect larger fields, processing facilities, pipelines or export terminals.

Strait of Hormuz Remains the Critical Risk

Shipping conditions around the Strait of Hormuz remain another major source of uncertainty.

A Kuwait-flagged oil products tanker carrying 21 Indian crew members was struck by an unidentified projectile while passing through the waterway. All crew members were reported safe, but the incident highlighted the continuing danger facing commercial vessels.

The Strait of Hormuz connects the Persian Gulf with the Arabian Sea and is one of the world’s most important energy chokepoints. Before the latest conflict disrupted trade, approximately 21 million barrels of petroleum products passed through the strait each day, equivalent to around one-fifth of global petroleum consumption.

Alternative pipelines can transport some Saudi and UAE crude without passing through the strait, but their combined capacity cannot replace all seaborne exports from the region. Iraq, Kuwait, Qatar and Bahrain have even fewer alternatives.

Consequently, additional tanker attacks could affect the market through several channels:

• Delayed crude and fuel deliveries;
• Higher insurance and freight costs;
• Reduced tanker availability;
• Temporary production shutdowns as storage facilities fill;
• Increased demand for crude from the United States, West Africa and other regions.

These effects can keep oil prices elevated even when the physical volume of crude reaching customers begins to recover.

Persian Gulf Oil Exports Have Recovered, but the Risk Premium Remains

Persian Gulf oil exports have recently returned to within approximately 10% of their prewar levels. Saudi exports have risen above their average before the conflict, partially compensating for lost Iranian barrels.

However, Iran’s crude exports have fallen to virtually zero following renewed US sanctions, while shipping and insurance costs remain exceptionally high. Attacks on vessels and energy facilities have also made the recovery fragile.

This explains why Brent remains above $110 even though tanker traffic has improved. Oil prices reflect not only the number of barrels currently reaching the market but also the probability of future disruption.

A temporary improvement in shipping does not remove the possibility that renewed military action could again restrict traffic or force producers to shut in output.

The US Energy Information Administration has already demonstrated how severe that risk can become. During an earlier stage of the conflict, limited Hormuz traffic forced several Persian Gulf countries to reduce production because they could not export enough crude or find sufficient storage capacity.

Oil Market Expected to Remain in Deficit

The International Energy Agency expects the oil market to remain in deficit through the end of 2026, even as high prices and weaker economic conditions reduce consumption.

The agency forecasts global oil demand will decline by approximately 2.6 million barrels per day this year to 102.4 million barrels per day. Nevertheless, constrained supply and shortages of middle distillates such as diesel are expected to keep market balances tight. Some product-market pressures could continue into 2027.

This combination is unusual. Oil demand is weakening, but geopolitical disruption is reducing effective supply even faster.

It also means that slower global economic growth may not immediately push crude prices lower. Prices could remain elevated until shipping risks ease, inventories recover and producers restore spare capacity.

Higher Oil Prices Renew the Global Inflation Threat

Brent crude remaining above $110 would have consequences extending well beyond the energy market.

Higher fuel and transportation expenses can increase costs for manufacturers, airlines, logistics companies and food producers. Businesses may then pass part of those costs to consumers, slowing the decline in inflation.

The effects are already visible in several economies. UK inflation accelerated from 3.1% to 3.5% in September, with motor-fuel prices rising 30% from a year earlier. The data strengthened expectations that the Bank of England could raise interest rates in November.

Similar pressure could affect Federal Reserve policy. Higher energy costs do not always produce persistent core inflation, but they can raise household inflation expectations and increase the cost of producing and transporting goods.

That could encourage the Fed to keep interest rates elevated or signal another increase later in the year. Higher rates would create additional pressure on bonds, technology stocks, gold and other interest-rate-sensitive assets.

Airlines and Oil-Importing Economies Face the Greatest Pressure

Airlines are particularly exposed because jet fuel represents one of their largest operating expenses. Carriers may introduce fuel surcharges or reduce less-profitable routes if prices remain elevated.

Oil-importing economies in Europe and Asia also face pressure through larger trade deficits, weaker currencies and higher consumer prices. India, Japan and several European countries are especially sensitive to sustained increases in imported energy costs.

Energy producers and oilfield-services companies could benefit from higher prices, although those gains may be offset by broader market concerns about inflation, interest rates and weaker economic growth.

For oil-exporting countries, higher prices increase revenue but also introduce risks. Attacks on infrastructure, rising security costs and weaker global demand could reduce the benefits of the price increase.

Oil Price Outlook: Can Brent Extend Its Rally?

The $110 level is the immediate pivot for Brent crude. Holding above it would keep the focus on approximately $112, followed by the second-quarter high near $118.

A more serious disruption to Saudi production or Hormuz shipping could send Brent toward $120 or higher. An extended regional conflict could produce an even larger risk premium, particularly if inventories continue declining.

The bearish scenario would require credible evidence of de-escalation. A ceasefire, restored Iranian exports or consistently safe passage through the Strait of Hormuz could push Brent back toward $105 and eventually the psychological $100 level.

For now, the market is pricing a fragile balance: physical oil exports are recovering, but the security environment around Saudi Arabia and the Persian Gulf is deteriorating. Until that contradiction is resolved, the oil price today is likely to remain volatile and unusually sensitive to military and diplomatic developments.