Brent Crude Hovers Near $105 as Hormuz Tanker Attacks Persist

A Market Caught Between Two Wars

Oil started the week of October 12 caught between two forces pulling in opposite directions. Iranian attacks on tankers in the Strait of Hormuz, and Houthi missiles aimed at Saudi Arabia, kept a large risk premium in prices. At the same time, Washington's plan to bring more Russian diesel onto world markets, along with a fragile pause in Ukraine's drone campaign against Russian refineries, gave traders a reason to sell. The result was a market still above $100 a barrel but unable to break much higher.

On Tuesday, October 13, Brent futures slipped about 1% to roughly $105.6 a barrel and West Texas Intermediate fell to about $92.8. The previous session's rally of nearly $2 had sent Brent to its highest settlement since mid-September.9 Quotes taken at different times of day varied a lot, from about $104.80 in one morning report to near $106 or higher in others. That spread is a measure of how jumpy trading has become.357 The broad level, though, is not in question. Brent has stayed above $100 for two straight weeks. It remains below the roughly $126 peak reached earlier in the conflict.67

Hormuz: Flows Are Recovering, Fear Is Not

The main driver is still the US-Iran war, now in its eighth month. The strait carried about a fifth of global oil and fuel supplies before the fighting began.6 On October 8, Brent rose 4% to settle at $104.28. Nine tankers had been attacked in and around Hormuz over the previous week, and Houthi forces fired ballistic missiles toward Riyadh.1 Prices came off their highs after President Trump said the US would not strike Iran before the November 3 midterm elections. He also described talks with Tehran as "productive." Washington added sanctions on 17 vessels it says carry Iranian oil.16

The physical data tells a more mixed story than the headlines. Kpler figures show about 9.5 million barrels per day leaving Hormuz in the week to October 6. That is roughly 30% below prewar levels. But total Middle East crude flows, counting pipeline routes such as Saudi Arabia's East-West line, were about 16.4 million bpd, close to normal.1 The US Energy Information Administration (EIA) estimates that shut-in Middle East production fell to 4.8 million bpd in September. That compares with 5.8 million in August and a peak of 10.9 million in May.44

In this writer's view, the recovery in volumes is real, but the market is pricing how fragile it is rather than how big it is. The EIA appears to agree. Despite expecting more output from the region, it raised its fourth-quarter Brent forecast by $14 to $105 a barrel. It assumes flows stay constrained and shut-ins average 4.5 million bpd through year-end.44 Some summaries of the same outlook give lower full-year averages for 2026 Brent. The quarterly figure is the one that matches today's market.47

Russia: Diesel Relief Collides With Drone Strikes

The second front is Russia's refining system. The International Energy Agency (IEA) has reported that Russian refinery throughput fell to its lowest level in decades this summer. It found that diesel output had dropped by about 30% and that a refinery was hit roughly every three days in the first half of 2026.2223 Ukraine's Defense Ministry says more than 51% of Russian refining capacity has been disabled. Independent outlets note this claim cannot be verified, and it goes beyond the IEA's more cautious description.2326 Even Vladimir Putin has acknowledged a cost of about 1% of Russian GDP.23

This is where Washington's priorities and Kyiv's split. Trump has repeatedly asked Ukraine to stop hitting refineries, saying the strikes worsen global diesel shortages.2130 Hours after he announced that Russia would supply diesel to world markets and that sanctions on Russian fuel would be temporarily lifted, an oil-loading terminal in Rostov-on-Don linked to the Novoshakhtinsk refinery caught fire after a reported drone attack.2130 Ukrainian drones also struck Russia's largest refinery, in Omsk, on October 8.28

Since Trump announced an "energy ceasefire," however, Kyiv appears to have held off. On October 13, Zelensky said Ukraine had not struck Russian energy sites for two days. He accused Moscow of continuing to attack Ukraine's grid.27 For oil traders, this is the part of Tuesday's selloff that seems most likely to hold. Extra Russian diesel would ease the tightest part of the market, refined products.9 Still, a truce that has lasted 48 hours and depends on Moscow's restraint is a weak basis for lower prices.

At the Pump: Record Autumn Prices

US drivers are feeling the effects. AAA's national average for regular gasoline was about $4.36 a gallon as of October 12. That is down from about $4.41 a week earlier but far above the roughly $3.12 of a year ago.13 This is the first October on record with the national average above $4.1317 September averaged $4.33, beating the previous September record by 50 cents. Diesel hit an all-time high of $6.53 on September 22.19 California remains the outlier, above $6.30, while Ohio and Indiana sit near $3.71 to $3.72.13

The reports agree on direction: prices are falling slowly, but they are still about a dollar or more above the roughly $2.98 average on February 28, when the US and Israel began strikes on Iran.1912 Some widely shared state-by-state figures are out of date. One still cited a $4.14 average from early September.11 The politics are clear: diesel above $6 and gasoline above $4 weeks before the midterms put pressure on the White House.16 That helps explain both the pre-election pledge not to strike Iran and the push on Russian diesel.

Natural Gas: Calm at Home, Tight Abroad

US natural gas tells a very different story. Henry Hub futures were about $3.17 per MMBtu on October 12. That is up about 9% over the month but barely changed from a year ago.31 Storage was about 3,415 Bcf in early October, 2.4% above the five-year average though below last year.38 The EIA expects Henry Hub to average $3.48 in 2026 and $3.16 in 2027.34

Europe looks nothing like this. Benchmark EU gas reached about €83 per MWh, roughly 164% higher than a year ago. Iran's tanker attacks threaten a chokepoint that handles about 20% of global LNG trade, and European storage is only about 73% full.33 The gap between a calm Henry Hub and a stressed European market makes US LNG export terminals the link between the two.

That link is currently operating below capacity. Feedgas to US export plants averaged about 17.1 Bcf per day in early October, down from 18.0 in September. The main reasons are a delayed restart at a Freeport LNG train and maintenance at Cove Point.31 NGI estimates that the Freeport shortfall alone removed nearly 5 Bcf of demand in one week.32 Hurricane Isaias added more uncertainty. It forced large Gulf of Mexico oil shut-ins, with estimates ranging from about 500,000 bpd to 1.3 million bpd as the storm advanced. Its forecast track mostly avoided the Texas-Louisiana LNG complex.1632 US LNG exports are still on pace to exceed 120 million tonnes this year, and new capacity at Golden Pass, Port Arthur and Rio Grande is due in 2027.34 In this writer's view, the current calm in US gas prices is likely to be temporary.

Data Centers: The Slower, Steadier Demand

The longer-term reason to expect higher gas demand is electricity. The EIA projects record US power use: 4,288 billion kWh in 2026 and 4,356 billion in 2027, driven largely by AI and crypto data centers.57 Natural gas still supplies about 40% of US generation.51 BloombergNEF now expects gas burned to power US data centers to rise by 15 Bcf per day through 2035, more than double its forecast from last December.56 Proposals for grid-connected gas plants have nearly tripled since early 2023.59

Forecasters disagree on how fast this will happen. Goldman Sachs expects gas to serve about 60% of new data-center capacity, while Morgan Stanley puts the figure nearer 30%. With Henry Hub around $3, the idea that AI demand sets a floor under gas prices is still more forecast than fact.52

Supply: US Output at Records

US producers are responding to high prices. Weekly crude output reached a record 13.98 million bpd in the week to October 2.42 The EIA expects 13.9 million bpd for 2026 and 14.3 million in 2027.44 Commercial crude stocks fell to 424.1 million barrels, only about 1% above the five-year average.17 Record shale output limits how high WTI can go and keeps it about $13 below Brent. It cannot replace barrels stranded in the Gulf.

The Bottom Line

Taken together, the reporting points to a market that is less short of oil than it was in May but less secure than its falling volumes suggest. In this writer's reading, the risk is skewed to the upside. A credible Hormuz reopening deal, which Tehran says it is still reviewing, would be the main reason for prices to fall.6 Without one, a single new tanker strike or broken energy truce could quickly undo the recent relief at the pump.