Brent Tops $95 as Barclays Warns: Hormuz Flows Still 23% Below Pre-War Levels

Brent crude rose 3.3% to $95.82 a barrel, while West Texas Intermediate (WTI) climbed 2.6% to $88.74, amid mounting fears of supply disruptions in the Gulf region and Europe.

The Houthis announced they had targeted a pumping station on the pipeline linking the Kingdom's east to its west, an oil facility in Yanbu on the Red Sea, and an Aramco building in Riyadh. Saudi military sources confirmed the destruction of two drones, one in the Riyadh area and the other in the oil-rich Eastern Province.

In the same context, the Iranian army announced that four oil tankers in the Strait of Hormuz would be targeted if they did not comply with its warnings, though Reuters reported that it was unable to independently verify these statements. Volumes passing through Hormuz had accounted for about one-fifth of global oil supplies before the outbreak of the conflict.

US President Donald Trump's remarks on Iran caused marked turbulence in the oil markets; prices fell by about one dollar at the Asian market open ahead of the publication of his tweet, then returned to fluctuating after he announced significant military gains against Iran.

On the European front, Ukraine targeted Russia's Ust-Luga port on the Baltic Sea with drones, and part of the fuel tank network at the facility, one of the most prominent hubs for Russian oil and refined product exports, was damaged. Timothy Snyder, chief economist at Matador Economics, pointed to the dual effect of Russia-Ukraine tensions and the operations of Iran's Revolutionary Guards in driving oil prices higher.

Barclays kept its oil price forecasts unchanged, affirming that short-term risks are skewed to the upside. The bank noted that direct net oil exports through the Strait of Hormuz amounted to about 9 million barrels per day in the week ending October 31, and that when ship-to-ship transfers and bypass pipelines are added, the total reaches about 18 million barrels per day, a level that remains 23% below pre-war levels.

Barclays explained that the 30-day average flow during October remained at 85% of the pre-war level of about 19.5 million barrels per day, adding that the recent decline in prices is inconsistent with tight supply and inventory data. The bank prefers long positions in far-dated calendar contracts, betting on the continuation of the backwardation structure amid a shortage of near-term supply.