Brent Crude Surges Past $102 as Iran Escalates Hormuz Tanker Attacks and Houthis Hit Saudi Infrastructure

Brent crude climbed above $102 a barrel on Wednesday, its highest level in recent sessions, as Iran accelerated attacks on tankers in the Strait of Hormuz and Houthi forces struck Saudi infrastructure, overwhelming any comfort traders might have drawn from the partial recovery of Middle East crude flows. The USO oil ETF traded at $144.91, up 0.64% on the day and 110% year-to-date, reflecting the sustained risk premium embedded in every barrel.

Iranian General Mohammad Reza Naqdi publicly declared the Strait of Hormuz closed, saying armed forces have full control and that routes created by "violators" through the rocky areas would soon be blocked. A senior Iranian official separately told Reuters that there are "no talks" with Washington on nuclear terms and that Iran "will never give up our right to enrich," extinguishing near-term hopes for a diplomatic offramp. Oil flows through Hormuz have nonetheless reportedly returned to around pre-war levels, though analysts noted the persistent threat of an Iranian missile strike, declining refinery capacity caused by missiles, and surging diesel demand kept prices elevated regardless.

The supply picture was further complicated by Tropical Storm Isaias threatening U.S. Gulf production and by a sharp draw in Fujairah oil product stocks, which fell 642,000 barrels or 7.8% week-on-week as of October 5. Diesel futures jumped 16 cents in a single session, raising alarms about food supply and inflation as harvest season peaks. The UAE Hormuz bypass route between Fujairah and Khor Fakkan has seen truck traffic surge from roughly 100 movements per day before the war to about 7,000 per day, itself a major new source of diesel demand. Qatar, meanwhile, was spotted amassing a fleet of empty LNG tankers in the Persian Gulf, a signal it may be preparing to boost shipments through the strait.

The U.S. Energy Information Administration raised its oil price forecasts for both this year and next, citing rapidly declining global inventories, tight diesel supplies and continued Middle East flow risks. Shell said it expects record refining margins and strong energy trading results in the third quarter as the Iran conflict drives large price swings. Iraqi oil revenues rebounded to more than $7 billion in September, returning to pre-war levels as high global prices offset war-risk discounts on its crude.

On the supply-management front, the International Energy Agency held an informal board meeting Wednesday afternoon to discuss the release of emergency stocks under a G-7 framework that pledged to make 100 million barrels of crude and diesel available. EU diplomats said member states broadly expect the release to merely formalize prior commitments rather than add new barrels to the market. Poland's energy minister said Warsaw is ready to release oil and diesel reserves provided other countries follow. Treasury Secretary Scott Bessent said he sees better oil supply ahead and described the rise in Treasury yields, with the 30-year hitting its highest since 2002 and the 10-year reaching 5.36%, as in line with global trends and not a cause for concern.

The oil rally weighed on equities, with European stocks falling and the U.S. stock rally stalling. In a separate development, Kalshi filed a proposal with the CFTC for a never-expiring oil futures contract on the same day CME cancelled its own plan for 24-hour oil futures trading.