Brent Extends Gains as Iran-Oman Hormuz Deal Nears

Brent crude fell more than 2% toward $107 per barrel on Monday following last week’s strong rally, as investors balanced persistent geopolitical tensions against signs that Middle Eastern oil supplies were recovering toward pre-conflict levels. US Energy Secretary Chris Wright said Persian Gulf oil flows had rebounded to around 80% of their pre-war levels, although refined-product shipments remained constrained. US President Donald Trump also said he had reached a diesel export agreement with Russia and delayed additional sanctions to avoid undermining peace negotiations with Ukraine. Meanwhile, Ukrainian attacks sparked fires at an oil export terminal and a storage depot in St. Petersburg on Sunday. In the Middle East, clashes between Saudi Arabia and Iran-backed Houthi rebels continued with little sign of easing, while three tankers sustained damage in the Strait of Hormuz over the weekend.

Brent crude fell below $108 per barrel on Monday but retained most of last week’s gains, as escalating hostilities in the Middle East and Eastern Europe kept supply risks elevated. Clashes between Saudi Arabia and Iran-backed Houthi rebels showed little sign of abating, with a Saudi helicopter crashing near the border with Yemen and the Houthis targeting Yanbu, a key oil export hub. Three tankers were also damaged in the Strait of Hormuz over the weekend as Iran’s IRGC navy maintained that the waterway remained closed and vessels could pass only with its authorization. In Europe, Ukrainian attacks sparked fires at an oil export terminal and a storage depot in St. Petersburg on Sunday, as Kyiv launched more than 1,000 drones at Russia in one of the war’s largest aerial assaults. Meanwhile, US President Donald Trump said he had reached a diesel export agreement with Russia and postponed additional sanctions to avoid jeopardizing peace negotiations with Ukraine.

Brent crude prices surged toward $110 a barrel on Friday, rising more than 5% this week amid tightening supply and strong demand for fuel from the shipping industry. Producers are facing higher freight rates and risk premiums to transport cargoes through the Strait of Hormuz, keeping uncertainty over future regional supply elevated. Iranian strikes on tankers in the strait have sharply reduced oil flows. In the week to October 13th, average daily flows fell to 11.62 million barrels from a baseline of 17.15 million barrels. Security risks in the Persian Gulf have contributed significantly to the price rally. Meanwhile, Ukrainian drone attacks on Russian refineries have further constrained fuel supply. Adding to the pressure, US crude inventories fell by 8.56 million barrels in the week ended October 9th.