Overview
Last week (October 26 – November 1), international crude oil prices swung in a high-level range as the market was torn between geopolitical risk premiums and hopes of diplomatic mediation. The Brent December contract closed the week between roughly $113.9 and $115.8 a barrel, while WTI December traded in a range of about $99.9 to $104.1. Measured on the post-roll January contract basis, Brent posted a modest weekly gain of about 1.4%, and WTI edged up less than 1% on the week. Although Qatari-led mediation efforts intermittently weighed on prices, support remained firm from disrupted transits through the Strait of Hormuz, reported attacks on Saudi energy facilities, an unexpected draw in US commercial crude inventories, and expectations that Washington could take limited military action against Iran. On Sunday (November 1), seven key OPEC+ producers held a video conference and decided to hold December output quotas unchanged, underscoring supply discipline. Notably, sentiment reversed sharply on Monday (November 2), when news that the US and Iran were again seeking a diplomatic solution sent prices down more than 7% in a single session, adding fresh uncertainty to the path of this geopolitical rally.
1. Week in review: high-level range, two failed rallies
Across the five trading sessions last week, prices moved in a choppy pattern of declines, recoveries, pullbacks and renewed gains.
On Monday (October 26), Brent December slipped 0.8% to settle at $115.81, weighed down by Qatari mediation signals. On Tuesday (October 27), reports of a fire near Saudi Arabia’s Ras Tanura export hub briefly revived supply concerns, but diplomatic easing expectations prevailed, and Brent fell 1.7% to close at $113.88, the week’s lowest settlement.
Wednesday (October 28) proved to be the week’s inflection point. The US Naval Forces Central Command (NAVCENT) issued a notice advising non-essential vessels to avoid transiting the Strait of Hormuz; the Houthis claimed an attack on Saudi Arabia’s largest refinery at Ras Tanura; and The Wall Street Journal reported that Washington had prepared Gulf states for possible short military action against Iran after the US midterm elections on November 3. Against this confluence of bullish signals, Brent December rallied $1.44 to settle at $115.32, while WTI December gained $2.78 to close at $102.78.
On Thursday (October 29), reports that US Vice President Vance had written to Iran to open a channel over humanitarian supplies revived hopes of de-escalation; Brent eased $0.44 to $114.88 and WTI fell $0.78 to $102.00.
On Friday (October 30), the Brent December contract expired and positioning rotated into the January contract, pushing the headline quote down by roughly $4.60 for purely technical reasons. Stripping out the roll effect, the January contract traded above $113.3 intraday, about 1.4% higher than its close of $111.70 on Friday, October 23. WTI December settled near $104.1, up less than 1% on the week. Overall, last week extended the geopolitical rally of the past month: according to the US Energy Information Administration (EIA), Brent spot averaged $114 a barrel in September, $23 higher than in August, leaving the market in a state of unusually high volatility and risk premium.
2. Strait of Hormuz: transit risk at its highest since the war began
The core engine of the rally remains Middle East geopolitics, above all the safety of the world’s most important crude artery, the Strait of Hormuz.
According to the Joint Maritime Information Centre’s (JMIC) Advisory Note Update 108 of October 25, 156 confirmed incidents against ships have been recorded since March 1, and the threat level in the strait remains at its highest; roughly 492 vessels were waiting outside the strait, including about 194 off Fujairah and Khor Fakkan, 178 between Dubai and Ras Al Khaimah, 55 near Musandam and Sohar, and 32 off Bandar Abbas and Qeshm. For comparison, daily transits averaged about 138 ships in 2025.
On the Iranian side, the Revolutionary Guards again declared the strait “closed” on October 26 and claimed to have mined several tankers; US Central Command (CENTCOM) pushed back on the 28th, saying all internationally recognized main routes had been cleared. Neither side’s mine reports are independently confirmed. On October 28, NAVCENT issued a notice through JMIC telling vessels without a need to transit to stay away, asking transiting ships to allow more time, and warning that neutral vessels may be questioned and searched — the first such notice since mid-July.
Shipping and data providers show a clear tightening of actual flows: Kpler data put October flows through the strait at an average of 11.7 million barrels a day, above September’s 9.8 million but well below the 14.5 million seen in February, before the crisis. The political picture was no less complex. On October 25, Qatar submitted to Tehran a draft plan coordinated with Washington built around a seven-day timetable — the US to halt hostilities, lift its naval blockade of Iranian ports and release frozen assets in the first five days, Iran to reopen the strait to normal trade on the sixth day, and talks on a comprehensive agreement to begin on the seventh. A senior Iranian official called the paper unacceptable to Reuters on the 28th, while Foreign Minister Araghchi said Tehran remained in close contact with mediators. Meanwhile, The Wall Street Journal reported that Washington had prepared Gulf states for a short campaign against Iran after the midterm elections, so the market could never fully rule out a supply disruption.
3. Saudi facilities: Ras Tanura fire and constrained Red Sea exports
Beyond Hormuz, the safety of Saudi energy infrastructure was the week’s other key flashpoint. In the early hours of October 27, a fire broke out near Ras Tanura, the kingdom’s largest crude export terminal. Saudi Arabia, according to an anonymous source speaking to Bloomberg, contained the blaze, but Houthi military spokesman Yahya Saree claimed a ballistic missile had struck the 550,000 bpd Ras Tanura refinery and started large fires; Riyadh did not confirm, and broadcaster Al Hadath attributed the fire to debris from an interception.
Even with the extent of damage unclear, export data already show disruption. According to a Kpler analysis reported by Asharq Business on October 26, Ras Tanura loaded an average of 2.95 million barrels a day from October 1–25, down about 29% from 4.16 million in September; total Saudi crude exports came to about 5.52 million bpd over the same period. In addition, the Houthis claimed attacks on the East-West Pipeline and its pumping stations on October 24 and 26 — the artery that bypasses the Strait of Hormuz and exports Saudi crude through the Red Sea port of Yanbu. Saudi Arabia did not confirm the strikes, and Reuters explicitly noted the absence of confirmation; Aramco CEO Amin Nasser said on the 23rd that the pipeline was running at around 7 million bpd, i.e., at capacity. Estimates of actual Saudi exports diverge widely across data providers (Vortexa, Tankertrackers and Kpler differ), with some analysts noting that tankers have switched off satellite transponders, adding uncertainty to loading statistics.
The Red Sea export route is still recovering. According to the Huatai Futures oil weekly report published on October 26, the East-West Pipeline, attacked in September, has been restarted and Yanbu is gradually resuming exports, with average daily exports of about 2.34 million barrels in the first half of October. On balance, multiple points of risk along the Middle East “facility–route–loading” chain keep a significant uncertainty premium embedded in supply assessments.
4. Inventories and supply: surprise US draw, low global stocks
Fundamentals were broadly supportive last week. The EIA’s weekly report released on October 28 showed that for the week ended October 23, US commercial crude inventories fell by about 1.9 million barrels to 410.6 million, against market expectations of a roughly 100,000-barrel build — the surprise draw lent direct support to prices. Distillate stocks fell 1.5 million barrels to 102.8 million, while gasoline inventories rose 3.9 million barrels to 209.2 million. Strategic Petroleum Reserve (SPR) stocks declined 100,000 barrels to 282.6 million, still near their lowest since October 1982. US crude production rose by 723,000 bpd to about 13.99 million bpd for the week.
On a longer horizon, global inventories keep draining. The EIA’s Short-Term Energy Outlook notes that global stocks have drawn down a cumulative 660 million barrels since March, nearly 60% of it from non-OECD tanks; the IEA puts the decline in observable global stocks at about 509 million barrels since the start of the year as of end-September, the lowest level since April 2025. US gasoline and distillate stocks are also at multi-year lows, and Chinese crude port inventories are low as well. Thin inventories leave little buffer, so any unexpected supply shock can translate into outsized price swings.
5. Diplomacy: every US–Iran signal moved the market
Almost every significant intraday decline last week corresponded to a diplomatic de-escalation signal, and every rebound to reports of military options. On October 28, US President Donald Trump said he had approved Vice President Vance’s request to contact Iran about medical supplies, while denying he had ordered the resumption of peace talks. On the 29th, reports of a Vance letter to Iran gathered pace and prices eased. Separately, The Wall Street Journal reported that General Brad Cooper, head of US Central Command, briefed Trump on strike options at the White House on the 29th, pulling market attention back to military risk ahead of the weekend.
The market’s hypersensitivity to “war or talks” reflects a simple fact: because of Iran’s position on the Strait of Hormuz, a prolonged closure would disrupt roughly one-fifth of global seaborne oil trade. Mediation involving Qatari, Turkish, Saudi and Pakistani officials proceeded in Tehran, but by the end of the week talks had yet to achieve a substantive breakthrough. With the US midterm elections due on November 3, markets widely believe the result will help shape how aggressive Washington’s Iran policy becomes next.
6. Black Sea disruption: Russian loadings backlog, European energy security under strain
Disruption in the Black Sea was also significant last week. On October 23, the Comoros-flagged tanker Khoryv sank after a drone hit about 13 nautical miles off Constanta, Romania; on October 28, a container ship was hit by three sea drones off Bulgaria, with all 18 crew members rescued. Reuters cited traders reporting loading delays of almost three weeks at Novorossiysk; Russian seaborne crude exports in November could fall by 100,000–200,000 bpd from October. Crude shipped via the Caspian Pipeline Consortium (CPC) is planned at about 1.69 million bpd in November, 2% below October.
According to the Financial Times, citing security firm Ambrey and the International Maritime Organization, more than 570 ships have been hit in the Black Sea in 2026, about 387 of them in the third quarter alone, with at least 40 seafarers killed. On October 28, the defence ministers of Turkey, Bulgaria and Romania agreed in Sofia on a coordination mechanism for information sharing and early warning, though no convoys or escorts were decided. The prolonged Black Sea risk, together with European gas prices briefly breaking above EUR 100 per megawatt-hour last week (the first time since December 2022), underscored Europe’s fragile energy security and indirectly supported the oil risk premium.
7. OPEC+ meeting: December quotas held unchanged
On Sunday, November 1, seven key OPEC+ producers — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman — held a video conference and announced that they would keep crude output unchanged for December, i.e., maintain the production quotas set in September 2026. The seven reaffirmed their commitment to full compliance with the Declaration of Cooperation and agreed to keep meeting monthly to assess market conditions, with the next meeting scheduled for December.
With prices at multi-year highs and geopolitical risk unresolved, OPEC+’s decision to hold output steady reflects both heightened caution about supply-disruption risk and limited near-term supply additions, leaving solid support under prices. In its October monthly report, OPEC estimated its own September production rose by about 920,000 bpd to 25.097 million bpd, led by a 744,000 bpd increase in Saudi output to 8.001 million bpd — yet the rebound has not altered expectations of a tight supply picture.
8. Demand: agencies revise 2026 forecasts lower
In contrast to the tightness on the supply side, major agencies have turned more cautious on 2026 oil demand. As summarized in the Huatai Futures oil weekly report of October 26: the IEA expects 2026 global oil demand to decline by 2.6 million bpd year-on-year, a 100,000 bpd downward revision from the prior month; the EIA sees demand down 1.97 million bpd, cut 290,000 bpd from the previous forecast; and OPEC trimmed its 2026 demand growth forecast to 180,000 bpd, down 200,000 bpd month-on-month, while raising its 2027 growth estimate by 200,000 bpd to 2.55 million bpd. On supply, the EIA projects 2026 global oil production to fall by 5.14 million bpd y-o-y, and the IEA expects supply to decline by 5.8 million bpd.
The divergence in forecasts reflects the market’s dilemma: geopolitical conflict pushes prices up and suppresses consumption, while high prices and disrupted shipping in turn weigh on demand — an unusual “dual contraction” of supply and demand. Among major consumers, US refinery run rates are high while Chinese refinery runs are low; the structural divergence in demand makes Asian buyers’ capacity to absorb high prices a key variable to watch.
9. Sudden reversal this week: US–Iran talks restart, prices fall more than 7%
Just as the geopolitical premium still dominated the market last week, sentiment reversed sharply on Monday, November 2. With Iran and Qatar resuming talks and the US and Iran again seeking a diplomatic solution, fears of supply disruption eased substantially and oil fell more than 6% intraday. At settlement, December WTI on NYMEX fell $7.66 to $96.46 a barrel, down 7.36%, while January Brent on ICE fell $8.66 to $104.77, down 7.63% — WTI’s biggest one-day loss since May 20.
The selloff confirmed the expectation-driven nature of last week’s rally: the geopolitical risk premium accumulated over recent weeks unwound quickly as negotiation signals emerged. Structurally, even after the plunge, Brent held above $100 and WTI defended the $95 level; the market has not entered a secular bear trend but has moved into a new equilibrium of “geopolitical discount” bargaining.
10. Outlook and risks
Looking ahead, international oil prices will revolve around three threads: first, substantive progress in US–Iran talks — any real negotiations or interim arrangement could see the risk premium unwind further; second, actual transit conditions in the Strait of Hormuz and the safety of Saudi facilities — any fresh attack or closure news could quickly lift prices; and third, the OPEC+ December meeting and global inventory trends, where marginal supply additions versus downward demand revisions will determine the price center.
For market participants, the elevated volatility itself is the most important risk: single-session moves of 7% have become routine, and position management and hedging matter more than conviction about direction. Beyond that, the US midterm election outcome, European gas prices, Black Sea shipping safety and Chinese demand data are all variables worth close monitoring. On balance, prices are likely to remain in a wide high-level range in the near term, with geopolitical headlines still setting the rhythm; confirmation of any one-way trend will require clearer supply or demand signals.
(Sources: Reuters, US Energy Information Administration (EIA), Joint Maritime Information Centre (JMIC), Kpler, Xinhua, Securities Times, Anadolu Agency, Huatai Futures oil weekly report, etc.)