Oil Stays Elevated on Middle East Escalation Fears, With WTI Near $93

Oil prices remained elevated amid military tensions in the Middle East and uncertainty over a possible energy ceasefire between Russia and Ukraine.

Bloomberg reported on October 12 that West Texas Intermediate was trading near $93 a barrel. WTI has climbed more than 6% over the past three sessions, while Brent settled below $107 a barrel the previous day. Concern that a recovery in Middle East crude supply could be delayed has underpinned prices.

Tensions in the region worsened again after Iran-backed Houthi rebels in Yemen attacked major Saudi Arabian airports with drones and missiles. At least 16 people were killed and about 300 were injured in attacks over the weekend, including one American. President Donald Trump said the US could consider joining the Saudi-led campaign against the Houthis.

Concerns over oil shipments through the Strait of Hormuz also persisted. A series of recent attacks targeting tankers has prompted some vessels to reroute from paths heading to the United Arab Emirates' main crude export port. The port has played a key role in restoring Persian Gulf crude exports to levels close to those seen before the war. Brent prices have risen more than 70% this year in the fallout from the war between the US and Iran.

Whether Russia and Ukraine halt attacks on each other's energy facilities has also emerged as a key variable. Trump said the two sides had agreed to an energy ceasefire, but later said there had been violations. Ukrainian President Volodymyr Zelenskiy said Ukraine would continue retaliatory strikes if Russia kept attacking energy infrastructure. The Kremlin has not yet disclosed a position on the energy ceasefire.

Saudi Arabia, meanwhile, is moving to expand its ability to ship crude without passing through the Strait of Hormuz. Saudi Energy Minister Prince Abdulaziz bin Salman said the kingdom could add 1.2 million barrels a day of transport capacity within the next seven to eight weeks by converting an existing gas pipeline. Over the next two to three years, it plans to increase capacity on pipelines that bypass the Strait of Hormuz by 40% to 10 million barrels a day.