Seven-month rally highlights market sensitivity to potential Gulf supply disruptions.
Brent crude surged to $106.60 a barrel, climbing $3.52, or 3.41%, as of 7.24am Friday in Tokyo. The global benchmark rose sharply amid renewed concerns over the US-Iran conflict and potential disruptions to oil shipments through the Strait of Hormuz.
Murban crude, a key benchmark for Abu Dhabi and the broader Gulf region, also advanced, rising $4.52, or 4%, to $117.60 a barrel.
West Texas Intermediate (WTI) crude was relatively stable at $94.51 a barrel, slipping 10 cents, or 0.11%. Natural gas, meanwhile, declined 10.9 cents, or 3.31%, to $3.188.
The contrasting price movements suggest that traders are currently paying greater attention to the location and security of physical crude supplies rather than broader energy demand.
Brent surges as WTI trails behind
Data from OilPrice.com showed Brent trading at a significant premium to WTI, with the gap between the two benchmarks reaching about $12.09 a barrel. The widening spread suggests international markets were pricing in greater risks to seaborne and Middle Eastern crude supplies compared with US domestic oil.
Brent had recently slipped below the $100 mark following reports of US-Iran contacts, the partial resumption of operations along Saudi Arabia’s East-West pipeline and indications that Gulf oil exports were recovering.
On September 23, Brent crude was trading at around $98.49 a barrel, while WTI stood near $89.28.
By September 24, broader market data showed Brent rising to approximately $102.33, with WTI climbing to about $93.96. According to Trading Economics, Friday’s sharp increase suggests the market’s risk premium intensified again in the following session.
Hormuz remains a key concern
The Strait of Hormuz continues to be a major source of uncertainty for global oil markets. Iran has said the strategic waterway will not fully reopen unless Washington meets certain conditions, including demands related to the US naval blockade.
While crude shipments are still moving through the strait, tanker traffic remains significantly below normal levels. Shipping companies have adopted cautious routing, ship-to-ship transfers and other measures to keep cargoes moving, while insurers factor in risks ranging from attacks and mines to sudden restrictions on shipping.
The uncertainty has a particularly strong impact on Brent because the benchmark is closely tied to international seaborne crude supplies. WTI, meanwhile, is more heavily influenced by factors within the US market, including domestic production, inventories, refinery demand and pipeline infrastructure.
Saudi exports offer some relief
Saudi Arabia has been working to restore crude exports after drone attacks disrupted its East-West pipeline, also known as Petroline, and temporarily affected shipments from the Red Sea port of Yanbu.
The pipeline has since resumed operations at reduced rates, with Aramco working to increase throughput towards approximately 4 million barrels per day.
Petroline plays an important strategic role because it enables Saudi crude to reach export terminals without passing through the Strait of Hormuz. Saudi Arabia has also increased loadings from Gulf terminals and used ship-to-ship transfers near Oman as part of efforts to maintain the flow of crude to international markets.
MarineTraffic data showed that six very large crude carriers (VLCCs) loaded nearly 12 million barrels of oil at Ras Tanura and Juaymah on September 21. Separate tanker-tracking figures estimated that around 14 million barrels were loaded onto seven VLCCs on the same day.
These measures have helped prevent an immediate global supply shock, but significant risks remain. Gulf oil shipments continue to face maritime security concerns, while alternative routes through the Red Sea remain vulnerable to Houthi attacks.
Seven months of oil price volatility
The latest surge follows seven months of sharp swings in global oil prices, driven largely by geopolitical tensions, supply concerns and shifting expectations over diplomacy.
- March: Brent climbed above $100 a barrel as the conflict and restrictions around the Strait of Hormuz heightened concerns over global oil supplies.
- June and July: Expectations of a possible ceasefire and signs of diplomatic progress temporarily eased the geopolitical risk premium.
- August: Oil prices strengthened again as negotiations lost momentum and Iranian officials signalled a more confrontational stance.
- September 10-16: Brent moved above $107 following attacks affecting shipping, Saudi energy infrastructure and alternative crude export routes.
- September 21-23: Prices retreated towards $98 amid reports of US-Iran contacts and the restart of Saudi Arabia’s Petroline, easing some supply concerns.
- September 24-25: Brent rebounded above $106 as traders reassessed the prospects for diplomacy and renewed concerns emerged over the security of oil flows through Hormuz.
According to Trading Economics data, Brent was at one stage in late September trading about 49% higher than a year earlier. WTI also recorded a substantial increase from levels seen in late August.
