Oil prices extended gains on Tuesday, with Brent crude climbing above $110 a barrel as fresh attacks in the Middle East overshadowed the potential for increased Russian supply following a US executive order. The geopolitical premium remains elevated, keeping Brent near its highest level since May.
Brent and WTI Prices
Brent futures rose 0.5% to $110.10 a barrel by 0319 GMT, after touching $110.70 on Monday, the strongest since May 20. US West Texas Intermediate (WTI) for November delivery gained 0.24% to $103.91, while the more actively traded December contract climbed 0.4% to $98.93. The November contract expires on Tuesday, adding to market volatility.
Russian Waiver Impact Limited
President Donald Trump's October 16 executive order waived sanctions and tariffs under the newly enacted Graham Act, including penalties tied to purchases of Russian oil and gas. However, the order did not remove all existing restrictions on Russian energy, and Washington is reviewing the implications of its decision.
Lifting a threatened trade penalty does not immediately boost Russian production. It may instead protect existing flows and reduce the risk for importing countries. Russian output reached 8.43 million barrels a day in September, still about 870,000 barrels below a year earlier, according to the International Energy Agency. The waiver offers potential relief rather than a guaranteed supply surge.
Gulf Attacks Sustain Premium
Yemen's Houthi movement claimed fresh attacks on Saudi energy and transport facilities on Monday, including targets in Yanbu and Shaybah. Saudi authorities had not independently confirmed those claims. Shipping is already under pressure, with market data indicating at least 18 vessels were attacked in the Gulf over the preceding fortnight, intensifying fears around the Strait of Hormuz.
Analysts warned that efforts to restore oil flows may not stabilise fuel markets while regional threats escalate. Traders are pricing in more than lost production. Higher insurance, freight costs, and the risk of another closure can keep delivered oil expensive even when exporters find alternative routes. This uncertainty explains why Brent recovered quickly from the decline after Trump's announcement.
Goldman's Forecast
The longer-term outlook is less bullish. Goldman Sachs Research expects Brent to reach $90 in December and average $80 in 2027 as Gulf exports recover and slower demand brings the market towards surplus. Daan Struyven, Goldman's head of oil research, said in the bank's October 16 analysis that supply adaptation should eventually lower prices, although renewed escalation could delay that adjustment.
Goldman estimates a geopolitical premium of nearly $25 a barrel in physical spot Brent prices, not necessarily the same premium in the futures contract quoted on Tuesday. The bank also estimates Gulf exports have returned close to their 2025 average, including less visible shipments.
This article is for informational purposes only and does not constitute financial advice.
