Why West Asia tensions are keeping Brent crude near a five-month high

Brent crude oil prices remained near a five-month high on Tuesday, October 20, as escalating tensions in West Asia heightened concerns over global energy supplies. Attacks claimed by Yemen’s Iran-aligned Houthi group on Saudi energy, airport and military targets, alongside reports of vessel attacks in the Gulf, kept traders on edge and crude prices above $100 a barrel.

Brent crude futures rose 52 cents, or 0.47 per cent, to $110.07 a barrel by 0628 GMT. Prices had climbed to $110.70 in the previous session, their highest level since May 20.

US West Texas Intermediate (WTI) crude futures for November delivery, which expire on Tuesday, gained 0.36% to $104.03 a barrel. The more actively traded December contract advanced 26 cents, or 0.26 per cent, to $98.80.

Why West Asia tensions are driving oil prices higher

The latest price gains reflect fears that escalating regional hostilities could threaten oil production facilities, shipping routes and the movement of energy supplies across the Gulf.

The Houthis said on Monday that they had launched attacks on several Saudi targets, including an Aramco facility in Yanbu, the Shaybah oilfield, Riyadh’s King Khalid International Airport and Abha airport. Saudi authorities had not immediately confirmed the claims, and Reuters could not independently verify them.

Separately, reports of attacks on commercial vessels have added to concerns about maritime security. Ship-tracking firm Kpler said in a note on Monday that at least 18 vessels had reportedly been attacked over two weeks.

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The possibility of further damage to energy infrastructure or disruptions to shipping has encouraged traders to build a geopolitical risk premium into oil prices. This premium reflects the additional amount markets are willing to pay amid uncertainty over whether supplies will remain uninterrupted.

ING analysts said oil prices remained well supported, with the market pricing in a significant risk premium because of the volatile situation. They added that the premium could gradually decline if oil flows continued without disruption, although there were no clear signs of that happening yet.

Oil supply risks outweigh potential relief from Russia

The latest rally comes even as developments involving Russian energy supplies offer the possibility of additional crude and refined fuel entering the market.

US President Donald Trump signed an executive order on Friday waiving key Russia-related sanctions and tariffs, including certain duties and penalties linked to purchases of Russian energy. However, Trump said on Saturday that a final decision had yet to be announced, while US Secretary of State Marco Rubio said officials needed more time to assess the situation.

Russia’s crude oil production rose by 65,000 barrels per day in September to 8.43 million barrels per day, according to the International Energy Agency. However, output remained around 870,000 barrels per day below the level recorded a year earlier.

KCM Trade chief analyst Tim Waterer said traders appeared more concerned about the risk of further damage to energy infrastructure across the Gulf than the potential relief from additional Russian diesel supplies.

US inventory data in focus

Investors are also monitoring US oil inventory data for signals about demand and near-term supply conditions.

A preliminary Reuters poll published on Monday indicated that US crude oil stockpiles, along with inventories of refined petroleum products, were expected to have declined last week.

A larger-than-expected drawdown could reinforce concerns about tighter supplies, while the trajectory of geopolitical developments will remain a key influence on prices.

For now, the outlook for Brent crude hinges on whether tensions in West Asia translate into actual disruptions to production or shipping. If energy flows remain largely unaffected, the geopolitical risk premium could ease. However, further attacks on infrastructure or vessels could keep oil prices elevated and intensify concerns over global energy costs.