Brent jumped to its highest since May on reports of post-midterm US-Israeli strike plans on Iran, while Houthi attacks and an Aramco headquarters evacuation raised fears for Saudi supply.
West Texas Intermediate (WTI) crude is trading around $98.80, higher for a second straight day and near five-week highs. Brent jumped 4% on Thursday to settle at $113.17, its highest since May. The trigger was a report that the US and Israel are drawing up plans for renewed attacks on Iran after the midterm elections, on top of fresh Houthi attacks on Saudi infrastructure. For weeks, bond yields set the tone for markets. This week, oil took that role back.
The war reaches Saudi headquarters
Aramco has reportedly told headquarters staff in Dhahran to evacuate, the first major evacuation since the war began. The Houthis hit Yanbu and an airport, and the Islamic Revolutionary Guard Corps (IRGC) warned that fresh US attacks could prompt Tehran to invade neighbouring countries and hit bases used by the US. Each step raises the risk that physical supply could be affected, which is why the market keeps adding a risk premium.
Ritterbusch and Associates described the move this way: "the complex is rebounding on another strong injection of risk premium related to an additional Houthi attack on Saudi infrastructure amid talk of a combined US-Israeli strike on Iran after the midterms." Iran's energy infrastructure is reportedly a likely target.
Other pieces on the board
In Europe, Ukraine has intensified attacks on Russian refineries amid a US-Russia agreement involving diesel supplies, adding another source of uncertainty for refined products. Deutsche Bank says investors "may now be pricing in a prolonged period of elevated oil prices well into 2027," a sign that traders see this as more than a short-term spike.
Why Oil matters for everything else
Higher oil keeps inflation fears alive, and that is why Gold fell to a two-month low on Thursday even as bond yields dropped sharply. It is also why a December Fed hike remains in play even though an October hold looks near certain, with the CME FedWatch tool showing a 92.8% chance of no change. Oil is currently the main force linking geopolitics, inflation, and central bank policy.
What this means for Oil
The direction is bullish while the Iran headlines keep building. WTI is near its highest levels in five weeks, and headlines about strike plans and Saudi infrastructure support more upside. The main downside risk is a diplomatic breakthrough or a clear de-escalation, which could take the risk premium out of prices quickly. For now, the market is trading the threat of disruption, not an actual shortage.
What traders should prepare for
Iran headlines: US-Israeli strike plans, IRGC threats and any diplomatic signal
Houthi attacks on Saudi infrastructure and developments at Aramco in Dhahran
Ukraine's attacks on Russian refineries and details of the US-Russia diesel agreement
Today's flash PMIs, especially the Prices Paid reading, and next week's Fed (October 28) and US PCE inflation (October 29)
The US midterms on November 3, which markets see as a possible turning point for Iran policy
Bottom line: Oil is back in the driver's seat because the threat of disruption keeps growing, and only a real diplomatic breakthrough is likely to take the risk premium out.
This article is for informational and educational purposes only and does not constitute financial or investment advice. Trading involves risk of loss — always do your own research before making any decisions.
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