Brent oil hit $110 a barrel for the first time since May as prospects for imminent supply relief dwindle, prompting traders to ramp up bets on higher prices ahead of the weekend.
According to Bloomberg, the global benchmark rose 3.7 percent, notching a second straight weekly gain, as bullish sentiment crystallised in the course of a session punctuated by reports of ongoing conflict in major export centers. Iran-backed Houthi rebels continue to pummel Saudi Arabia with missile and drone strikes, while Russia and Ukraine exchange tit-for-tat attacks on energy infrastructure.
The last time prices reached these levels was almost five months ago, when paralyzed global crude and fuel flows spurred a fragile, short-lived agreement that briefly reopened the Strait of Hormuz.
Now, cargo volumes traversing the key waterway are nearing pre-war levels, topping 100 million barrels of crude last week. Still, prices remain stubbornly high, leaving US President Donald Trump with fewer and fewer options to tame energy costs ahead of the November 3 midterm elections.
US lawmakers introduced a bill Friday to block Trump’s deal with Moscow to release several hundred million barrels of diesel. The legislation reflects widespread opposition to any measures that would allow Russia to pad its war chest.
“After a brief reprieve, the oil market is having to price risk back in, particularly heading into the weekend,” said senior energy trader at CIBC Private Wealth Group, Rebecca Babin.
Diesel and gasoline futures also rose. Diesel settled at $4.90 a gallon in New York. Contracts for both commodities are trading at the highest-ever levels seasonally.
The continued exclusion of Russian diesel from global markets forces refineries elsewhere to boost oil processing to meet demand. Trump has reiterated that Moscow will follow through with a diesel release. But ongoing strikes like the recent attack on Russia’s Ryazan refinery reported by Reuters are amplifying doubts about whether the agreement will deliver as promised.
Analysts are closely watching developments in the Persian Gulf for any signs the conflict is worsening. Trump declined to rule out using a weapon known as the “Mother of all Bombs” on Iran after the November 3 election, according to an interview with Newsmax.
