Brent Crude Tops $114 to Reach a Five-Month High
Brent crude rose above $114 a barrel, reaching its highest level in five months.
Brent settled Thursday up 4% at $113.17 a barrel and traded around $114 in Asian trading on Friday. West Texas Intermediate, the U.S. benchmark, also moved above $100 a barrel. Brent has risen about $6 this week and is on pace for a third straight weekly gain.
The immediate trigger was an escalation of Houthi attacks aimed at Saudi Arabia. Reuters reported that the Houthis attacked King Fahd International Airport on Wednesday evening, killing two people and injuring eight, and that facilities of Saudi Aramco, the state oil company, were also targeted.
Aramco instructed staff at its Dhahran headquarters to evacuate and switch to working from home, Reuters reported, citing six people familiar with the matter. The reason for the evacuation was not known.
Supply concerns surfaced elsewhere as well. Libya’s National Oil Corporation said a pipeline carrying crude from two fields to an export terminal had been halted, forcing it to cut production at the two fields.
Reports that the United States and Israel are considering fresh strikes on Iran after the November 3 midterm elections also pushed prices higher. The United States is reinforcing its forces in the Middle East, deploying a second aircraft carrier to the region.
The commodities strategy team at ING revised its quarterly outlook. The bank said its previous forecast that Brent would average $80 a barrel in the fourth quarter is no longer achievable. Even if tensions do not escalate again, the bank said, the possibility alone is likely to keep a significant risk premium in prices.
Higher crude prices eventually reach the gas pump. Crude accounts for roughly half the retail price of gasoline, and pump prices typically follow crude higher within days to weeks.
The moves are not always in one direction. Prices dipped briefly on Thursday after President Donald Trump announced measures to increase domestic oil and gas production, but Middle East supply concerns took over again and prices turned back up.