Oil Slips From Five-Month High as Middle East Supply Holds Near Prewar Levels

International oil prices retreated from a five-month high as crude supply remained close to prewar levels despite escalating military clashes in the Middle East.

Bloomberg reported on Oct. 18 that Brent crude, the international benchmark, traded below $109 a barrel. That gave back part of the gains after prices jumped about 4% on Oct. 16. West Texas Intermediate hovered around $101 a barrel.

Attacks involving oil shipments and energy facilities have continued across the Middle East. A Saudi helicopter crashed near the Saudi-Yemen border, and Yemen's Houthi rebels attacked Yanbu, a major oil export hub. There were also reports that two tankers were attacked in the Persian Gulf.

Even so, oil shipments have held at a steady level. The U.S. government said more than 100 million barrels of crude passed through the Strait of Hormuz last week with U.S. military escort support. That indicates Middle East oil supply has not suffered a full-scale disruption, easing some of the upward pressure on prices.

Brent has risen about 80% this year on supply concerns tied to the Middle East conflict and the Russia-Ukraine war. June Goh, a senior oil-market analyst at Sparta Commodities, said geopolitical risks and higher Middle East crude shipment volumes would keep Brent moving around $100 a barrel. With the global economic outlook weak, the market is struggling to absorb further gains in oil prices.

At the same time, continued attacks on energy facilities and vessels are fueling the possibility of further gains in oil prices. Jorge Leon, head of geopolitical analysis at Rystad Energy, said rising attacks on energy infrastructure and ships were weakening expectations for a sustained recovery in oil supply. He said the market is reflecting the possibility of prolonged supply disruptions, leaving the balance of risk tilted toward higher oil prices.