Crude oil rose above $110 on October 22 after a drone strike on a Saudi Aramco oilfield sparked supply fears. Brent crude traded 1.18% higher at $110.18 a barrel. The expanding conflict in West Asia caused this jump, as many worry that further attacks on energy infrastructure will disrupt global supplies.
Oil prices rose on Thursday after a drone strike on a Saudi Aramco oilfield heightened concerns that the expanding conflict in West Asia could disrupt supplies.
The attack also prompted the United States to order some diplomats and their family members to leave its missions in Saudi Arabia.
Crude oil price on October 22Brent crude traded 1.18% higher at $110.18 a barrel, while US West Texas Intermediate (WTI) crude was trading more than $98 a barrel. Brent had settled largely unchanged on Wednesday, while WTI had eased 67 cents.
Yemen's Iran-aligned Houthis struck several targets on Wednesday, killing at least one person and injuring eight others at a civilian airport in Dammam. A separate drone attack on a Saudi oilfield killed two people. Meanwhile, explosions were reported in Sirik, in southern Iran, on Wednesday. Iranian media said the cause and origin of the explosions were unknown.
Iranian Foreign Minister Abbas Araqchi told the Financial Times on Wednesday that Tehran was fully prepared to defend itself. President Masoud Pezeshkian also told state media that the United States could not expect dialogue while continuing to blockade and threaten Iran.
More attacks?The New York Times reported that the US and Israeli militaries have drawn up specific plans for renewed strikes against Iran after the American midterm elections, citing US officials and others briefed on the discussions.
Preparations for a short but intensive operation are progressing, with both militaries stepping up exercises and flying aircraft over Iraq to practise strike manoeuvres. US Defense Secretary Pete Hegseth also met Israeli Prime Minister Benjamin Netanyahu in Israel this week to discuss fresh strikes, according to US officials.
Potential targets include Iran's energy infrastructure, nuclear facilities, and missile and drone arsenal. Some officials believe another major round of attacks could push Iran's economy over the brink and compel Tehran to make diplomatic concessions after nearly eight months of conflict.
Where are prices headed?Uncertainty over how the conflict will unfold continues to cloud the outlook for oil prices. JPMorgan analysts said the war's eventual trajectory remained difficult to model. At the outset of the conflict, the bank had expected the US administration to avoid crossing certain economic thresholds. Seven months later, many of those thresholds had been crossed, while a clear exit strategy remained elusive.
The risk of further supply disruptions has also strengthened expectations of higher oil prices. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks had underscored how shipping disruptions could spread and intensify.
Goldman Sachs has outlined a scenario in which oil prices could rise to $120 a barrel if attacks on vessels in the Middle East escalate. Conversely, a return to normal export levels could bring prices down towards $80 a barrel. Struyven said shipping risks had become a key factor influencing oil prices, adding that the bank saw significant upside potential for crude. Goldman Sachs also expects natural gas and refined fuel prices to increase, with supply shocks having a greater impact on gas and refined products than on crude oil.