As conflicts in the Middle East and between Russia and Ukraine continue to threaten global energy supplies, international oil prices surged sharply on Friday, with Brent crude touching $110 per barrel for the first time since May of this year.
With supply tightness unlikely to ease significantly in the near term, traders increased bullish bets ahead of the weekend, driving international oil prices to rise for a second consecutive week.
On Friday, Brent crude futures climbed 3.7% to settle at $109.86 per barrel, having briefly touched $110 during intraday trading, while U.S. WTI crude futures rose 3.5% to close at $101.41 per barrel.
Amid sustained disruptions to energy supplies from the Middle East and Russia, international crude oil prices have accumulated gains exceeding 75% so far this year.
Recently, geopolitical risks in major global energy-exporting regions have intensified once again.
Iran-backed Houthi forces have continued launching missile and drone attacks on Saudi Arabia, while Russia and Ukraine have repeatedly conducted retaliatory strikes against each other's energy infrastructure, heightening market concerns about disruptions to crude oil and refined product supplies.
Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, stated: "After a brief respite, the oil market has had to reprice risk, especially as the weekend approaches."
It is worth noting that the last time Brent crude reached this price level was nearly five months ago.
At that time, global crude oil and fuel transportation was severely disrupted by Middle East conflicts, and the parties involved subsequently reached a fragile and short-lived agreement that temporarily reopened the Strait of Hormuz.
Now, although crude oil shipments through this critical global energy transit route are gradually recovering to pre-war levels—with total crude transported through the strait exceeding 100 million barrels last week—international oil prices remain elevated, indicating that market concerns over energy supply risks have not yet subsided.
Meanwhile, tightness in the global refined products market is particularly pronounced.
On Friday, New York diesel futures settled at $4.90 per gallon, with both diesel and gasoline futures prices at their highest levels for this time of year in history.
European diesel futures have more than doubled this year, significantly outpacing crude oil gains.
Russian diesel continuing to be excluded from global markets is a major factor driving refined product prices higher.
Due to restricted Russian supply, refineries in other regions have had to increase crude processing volumes to meet global fuel demand.
U.S. President Donald Trump previously reached an agreement with Russia to release hundreds of millions of barrels of diesel into the market to alleviate energy supply pressure.
However, U.S. lawmakers on Friday proposed legislation seeking to block this arrangement, reflecting broad domestic opposition to measures that could increase Russian fiscal revenue.
Although Trump reiterated that Russia will honor its commitment to release diesel supplies, ongoing attacks by both Russia and Ukraine on energy infrastructure have created uncertainty about whether the agreement can be smoothly implemented.
According to Reuters, Russia's Ryazan refinery was recently attacked, further raising market concerns about the country's refining and refined product export capacity.
Beyond Russia's energy supply issues, the situation in the Persian Gulf has also become a focal point for traders.
Trump recently said in an interview that he would not rule out using the large bomb known as the "Mother of All Bombs" against Iran after the U.S. midterm elections on November 3.
Previously, media reports indicated that the United States had developed plans for possible military strikes against Iran, which could include the use of the GBU-43/B Massive Ordnance Air Blast bomb.
Political risk consultancy Eurasia Group raised the probability of further escalation of Middle East conflicts from 35% to 65% in its latest report.
The firm's analysts stated: "The conflict is likely to escalate. For the United States, the current stalemate is no longer sustainable."
Persistently high energy prices are also putting increasing political pressure on the Trump administration.
With the November 3 midterm elections approaching, how to reduce domestic fuel costs has become an urgent issue for the White House.
To ease supply tightness, the U.S. government has attempted to lower oil prices by tapping emergency petroleum reserves and lobbying other countries to increase supply.
On Friday, the United States announced plans to offer up to 17 million barrels of crude oil from the Strategic Petroleum Reserve to boost market supply.
However, there is a notable divergence between recent crude oil futures market performance and the supply tightness signals continuously emanating from the physical market.
Although global energy security conditions continued to deteriorate over the past week, crude oil futures prices remained range-bound for most of the time before Friday, only showing significant gains on Friday.
This divergence has led traders to worry that the market may be underestimating potential supply disruption risks.
Against the backdrop of highly uncertain geopolitical conditions, some investors have chosen to reduce positions to avoid losses from sudden news events.
The number of outstanding Brent crude futures contracts briefly fell to its lowest level since March 2025 earlier this month.
Additionally, Brent crude's gains have recently lagged behind U.S. WTI crude most of the time, causing the spread between the two to narrow.
This is partly related to declining transportation costs for U.S. crude exports.
According to Baltic Exchange data, over the past week, the cost of transporting a typical crude cargo from the U.S. Gulf Coast to Rotterdam in the Netherlands fell by approximately 12%, enhancing the competitiveness of U.S. crude in international markets.
Meanwhile, commodity trading advisor (CTA) trend-following trading strategies and other technical factors have also contributed to the relative strength of U.S. crude.
With escalating risks of Middle East conflict, uncertain prospects for Russian diesel supply, and continued tightness in global refined product markets, international energy prices still face considerable upward pressure.
Although the U.S. government is attempting to stabilize the market through measures such as releasing strategic reserves, the subsequent development of geopolitical conditions will remain a key factor influencing international oil price trends.
Comments