Oil prices experienced a dramatic surge on Friday, with Brent crude surpassing $110 per barrel for the first time since May as prospects for imminent supply relief dwindle. According to The Economic Times, the global benchmark climbed sharply higher as Iran intensified attacks in the Strait of Hormuz, Houthi militants launched missiles at Saudi Arabia and Ukraine pledged to resume strikes on Russian refineries, fuelling concerns over global energy supplies. At least nine tankers and cargo ships have come under attack since Sunday as Iran seeks to disrupt oil exports through the strategic waterway, with the International Maritime Organization reporting three seafarers injured and two missing this week. Iran sank the container ship GFS Pride on Wednesday, while the crew of the Singapore-registered vessel was safely evacuated, adding to the complex web of supply disruptions. WTI also surged, recording weekly gains above 10%, as the energy market faces mounting pressure from multiple fronts.
Geopolitical risks have intensified with US lawmakers on Friday introducing a bill to block a proposed deal with Moscow to buy several hundred million barrels of diesel from Russian reserves, as reported by Zee News. Lawmakers expressed opposition to the move seen as potentially bolstering Moscow's war finances. Further escalation came after reports of a strike on Russia's Ryazan refinery that led to a suspension of operations, adding to the complex web of supply disruptions. US President Donald Trump has declined to rule out using GBU-43/B Massive Ordnance Air Blast Bomb, dubbed "Mother of all Bombs," on Iran after the November 3 election, according to a report by Newsmax, signaling potential military escalation in the region. Earlier in the week, Aramco was also targeted when one of the oil giant's administrative buildings in Dhahran was hit, with the Houthis having earlier attacked Riyadh's international airport on October 10, killing 12 people and injuring more than 300.
Gold prices steadied on Friday after posting their biggest gain in more than two weeks on Thursday, with spot gold trading near $4,155 an ounce after climbing 1.6% in the previous session. As reported by Moneycontrol, this recovery came after gold had hit its lowest since October 7 on Wednesday. The precious metal's strength was supported by a stock selloff that drove investors into bonds, pushing down Treasury yields, creating a supportive environment for non-yielding assets. According to The Economic Times, the latest developments show the Trump administration is considering easing sanctions on so-called shadow fleet vessels that have transported oil and petroleum products from countries including Russia, Iran and Venezuela to help ease prices. This recovery follows Thursday's strong performance when spot gold rose 1.3% to $4,158.63 per ounce and US gold futures for December delivery up 1.8% to $4,180.00 per ounce.
US Bureau of Labor Statistics data released Wednesday showed the consumer price index rose 0.6% on a monthly basis, marking the fastest increase since April due to elevated energy costs. According to Moneycontrol, this hot inflation reading had initially pushed the dollar to an 18-month high, but cautious remarks from Federal Reserve officials and a pullback in Treasury yields led traders to scale back expectations of an October rate hike. US producer prices increased by the most in 4-1/2 years in September amid rising costs for goods and services, the latest indication of inflation broadening out beyond energy products. This followed Wednesday's consumer price report showing prices accelerated in September on a surge in gasoline costs. According to The Economic Times, FedWatch Tool shows traders pricing in a 28% probability of a rate hike later this month and 93% chance of an increase in December. The Dollar Spot Index was little changed as traders awaited remarks from Federal Reserve Chair Kevin Warsh and other central bank speakers for signals on the next interest rate hike.
Looking ahead, Brent crude price is expected to reach $90 a barrel in December 2026, up 6% from the previous forecast of $85, according to a report cited by Zee News, citing ongoing supply-side risks from the West Asia conflict that are keeping a hefty risk premium in time spreads. The December 2026 forecast surged because of "ongoing downside risks to supply likely to slow the moderation in the time spreads risk premium—which we estimate at just over $20 today," the report from Goldman Sachs said. When the West Asia war started in February-end, Brent crude stood around $70/bbl, which jumped to over $125/bbl as shipping through the Strait of Hormuz, a transit point for nearly 20% of world's oil shipments, was disrupted. Gradual reopening led to moderation in crude prices to pre-war days before oil climbed back to test the $110/bbl mark. Goldman Sachs has outlined a scenario in which oil prices could rise to $120 a barrel if attacks on vessels in the Middle East escalate, while a return to normal export levels could bring prices down towards $80 a barrel. The risk of further supply disruptions has also strengthened expectations of higher oil prices, with shipping risks becoming a major driver of oil price movements.
