Brent Oil Breaks $105 Range, Rattling Stocks Before Fed Meeting

A week-long stalemate that cracked on Friday

For most of the week of October 12, crude seemed to have settled into an uneasy balance. Analysts described ICE Brent as rangebound near $105 a barrel. In their reading, two forces had offset each other: tankers kept moving through the Strait of Hormuz, and Iranian drones kept attacking them.31 On Friday morning that balance still appeared to hold. Brent slipped about 0.7% to $105.21 and West Texas Intermediate fell to $97.20, though both benchmarks remained on track for weekly gains.35 Other reports from Friday morning placed Brent between $105.45 and $105.48.3436

By the end of the session, the picture had changed. Oil rose more than 3% on Middle East supply worries,25 and Brent briefly reached $110 for the first time since May.28 Late-session quotes showed Brent near $109.70 and WTI near $101.50, each up about 3.6%.31

That is the main difference in how the week was covered. The "stuck at $105" story was accurate for several days, but it no longer fit by Friday's close. My reading is that the range was never a true equilibrium. It was a pause in a market still carrying a large war premium, and Friday showed how quickly that premium can grow.

Why barrels alone are not bringing prices down

The most useful point in this week's oil coverage is that the problem is now shipping, not supply. Kpler data cited by several outlets put average Hormuz clearances at about 11.62 million barrels a day in the week to October 13. That is roughly 68% of the 17.15 million-barrel baseline.3536 Two Emirati vessels sank near the strait during the week, and Gulf attacks pushed war-risk insurance costs higher.35 US Central Command reportedly confirmed that an Iranian projectile struck a Singapore-flagged container ship that later sank in the strait. That account has not been independently verified.40

Goldman Sachs put Brent's geopolitical risk premium at about $22 a barrel, the second-highest monthly reading on record.35 ING strategists Warren Patterson and Ewa Manthey said doubts about whether Hormuz flows can last are keeping a large premium in prices. They suggested a US-Iran agreement could remove it.36

Washington and the International Energy Agency have tried to ease the pressure:

• IEA emergency stocks. IEA members agreed to release the remaining 100 million barrels from an emergency program launched in March 2026, including about 20 million barrels of diesel.36 About 330 million barrels had already been released under that program.35
• Shadow-fleet tankers. The Trump administration is weighing whether to lift sanctions on some vessels tied to Russia's shadow fleet or to earlier Venezuelan deliveries, so they can carry Gulf oil.31 Kpler analysts estimate that only about 24 of 160 sanctioned supertankers could realistically return to mainstream trade, because many are too old or lack insurance or certification.35 ING also cautioned that existing commitments and European sanctions could limit the plan.36

Haitong Futures analysts made the same point: stock releases can only do so much without real de-escalation.35 I agree. Policy has targeted volumes, while traders are pricing risk.

A conflict on several fronts

The risk now extends well beyond Hormuz. Houthi drone strikes caused extensive damage to Saudi Aramco's headquarters in Dhahran, and the Yemeni group threatened more attacks on airports and oil sites.32 Reuters tied Monday's move above $106 to deadly weekend strikes on Riyadh's international airport.22 The US-Israeli war with Iran is now in its eighth month, and attacks on tankers in Hormuz were reported at their highest level of the conflict earlier this month.37

Russia and Ukraine pulled prices both ways. Trump's announced "energy ceasefire" between the two countries briefly pushed crude lower on Monday.14 Its details were unclear, and the plan faces opposition in Washington.27 Ukraine later questioned the arrangement.36

The US also showed real physical tightness. Government data showed crude inventories falling by 8.6 million barrels and diesel by 2.5 million in one week, helped by hurricane-related outages.35 Those outages are now fading. Offline Gulf of Mexico capacity had fallen to 200,000 barrels a day by Friday.31 The IEA warned that diesel shortages would continue into 2027, with stocks unlikely to rebuild before the third quarter of that year.33 That helps explain why WTI rose almost 6% on the week while Brent gained less than 1% before Friday's jump.35

The Fed's October dilemma

Oil is now feeding directly into monetary policy. September consumer prices rose 3.7% from a year earlier, above the 3.6% forecast, with fuel prices up 9.1% year on year.18 Core CPI rose 0.3% on the month.21 Reuters reported that both the consumer and producer price data came in hotter than expected and showed price pressures spreading beyond energy.25

The Federal Reserve raised rates by a quarter point to 3.75%-4.00% in September in a 12-0 vote, its first hike since 2023.1 Minutes from that meeting showed most officials expect another increase by year-end but gave no timing.3 Chair Kevin Warsh declined on Friday to rule out an October move.20 The FOMC's pre-meeting blackout begins October 17, so markets will hear no further guidance before the October 28 decision.8

The sources disagree on how likely an October hike is. Yahoo Finance reported that CME FedWatch odds of a hike jumped to about 40% after the CPI report, up from roughly 20% the day before.4 On Friday, prediction market Kalshi showed only a 12% chance of a hike and 87% for a hold.10 J.P. Morgan Wealth Management expects a hold in October but sees 50 basis points of further hikes before the cycle ends.5 RSM's Joseph Brusuelas expects the Fed to wait until December because the meeting falls so close to the election.4

The politics are hard to ignore. The decision comes six days before the midterms, and Wolfe Research's Stephanie Roth said officials would much prefer not to move then.4 Weak September payrolls, up just 29,000, had already pushed rate-hike expectations toward December.8 One trading analysis listed Brent above $105-$110 as a possible trigger for an October hike.8 Brent briefly reached $110 on Friday.

My judgment is that a hawkish hold is still the most likely outcome. However, the case for waiting until December weakens each day oil stays near $110. The European Central Bank announces its own decision on October 29, the day after the Fed.8

Stocks: the oil shock hits a fragile AI trade

Equities had their worst week since June. On Friday the S&P 500 fell 1.09% to 7,659.44 and the Nasdaq fell 2.15% to 26,140.03. Over the week, the Nasdaq lost 4.48% and the S&P 500 nearly 1.95%, while the Dow gained 0.67%.25 The VIX volatility index rose more than 20% to above 20.28

Reports differ on how much of the selloff to blame on oil. Reuters and CNN put most of the weight on concerns that heavily indebted AI infrastructure companies may struggle to repay loans as borrowing costs rise.2528 CoinDesk's live coverage instead described an oil surge hitting already shaky equity markets.17 In my view these are one story, not two. Higher oil raises inflation, inflation raises rates, and higher rates hurt highly leveraged AI companies the most. As one investor told Reuters, high oil tends to compress price-to-earnings multiples.25

The rotation within the market supports that reading. Energy led Friday's sector gains, up 2.47%.25 Exxon Mobil, Chevron and ConocoPhillips all hit intraday records earlier in the week.21 Earlier this month, Treasury yields reached their highest levels in 24 years.27

Bitcoin trades like a rate-sensitive asset

Bitcoin has not acted as a hedge against geopolitical risk. Recent coverage describes it moving like other risk assets that depend on interest rates. It fell below $82,000 after the CPI release as bond yields rose.18 Earlier, it had dropped on rising oil and expectations of tighter policy.11 By Friday it had slipped to about $81,500.17 That is roughly 36% below its October 2025 record of $126,198.20

CoinDesk noted that Bitcoin briefly tried to separate from equities as stock losses deepened on Friday afternoon.17 That was a small move. Exchange-traded fund outflows of almost $500 million on a single day earlier in the month show that institutional selling, not crypto-specific news, is driving prices.16 Investing.com also reported spot ETF outflows weighing on Bitcoin.14 Gold, meanwhile, has held above $4,150 an ounce on safe-haven demand.40

What to watch

The signals now point the same way. The $105 range for Brent did not hold. Inflation is broadening beyond energy. The Fed has stopped talking before its meeting with an October hike still possible. Paul Tudor Jones told CNBC that oil could rise another $20 to $25 because of the Iran conflict.21 Trump has said the US will not strike Iran before the November 3 midterms.16 That promise expires soon after the Fed meets. Until there is a credible de-escalation in the Gulf, the oil premium is likely to keep driving moves in stocks, Treasuries and Bitcoin, and to shape the Fed's next decisions.