Oil prices rose as escalating hostilities from Russia to the Middle East once again threatened supplies that had just recovered to near pre-war levels.
Brent settlement climbed above $106 per barrel, while WTI closed 1% higher. Iran-backed Houthi forces launched missile and drone attacks on multiple locations in Saudi Arabia, one of which damaged Saudi Aramco's headquarters. Iranian attacks on vessels transiting the Strait of Hormuz have increased sharply, potentially threatening the recent recovery in Persian Gulf oil exports.
Beyond the Middle East, Russia and Ukraine have been striking each other's energy infrastructure. Russia has historically been one of Europe's main suppliers of diesel, and European diesel prices have more than doubled this year. "The developments of the past week are a reminder once again that supply restoration does not mean supply security," said Emily Ashford, head of energy research at Standard Chartered. "With infrastructure and shipping facing growing risks, the risk premium is unlikely to fade."
The International Energy Agency (IEA) warned that despite a weakening outlook for oil consumption, global supplies of diesel and other fuels will still face pressure next year due to conflicts related to the Middle East and Russia. WTI for November delivery rose 1% to settle at $95.09 per barrel. Brent for December delivery rose 0.4% to settle at $106.06 per barrel.
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