Brent crude tests $100 as supply and geopolitical risks clash

Brent crude oil prices are testing a critical support level near $100 per barrel, while West Texas Intermediate (WTI) is hovering around $90. The market is caught between improving supply conditions and persistent geopolitical risks. On Tuesday, Brent traded near $100.60 and WTI around $89.70 in Asian hours. The $100 mark has been tested repeatedly after a two-week low on Monday, but each attempt to break lower has been met with resistance due to fragile supply security.

The bearish case for oil prices has strengthened recently. The G7 nations agreed to release 100 million barrels of crude and diesel from emergency reserves over four months, with an early focus on diesel. Additionally, OPEC+ kept November production targets unchanged, while Middle East crude exports have climbed back towards pre-war levels. Kpler data shows regional exports exceeded the pre-war average of about 18 million barrels a day on four days in late September, reaching as high as 22.5 million barrels.

However, the market remains cautious due to ongoing geopolitical tensions. Shipping through the Gulf remains expensive and dangerous, with tanker shuttle routes costing as much as $40 million per round trip. Recent attacks around the Hormuz Strait have raised insurance and security costs. Yemen’s Houthis claimed attacks on Saudi airports, military sites, and an Aramco refinery at Rabigh, although damage has not been confirmed. Saudi-backed Yemeni forces have launched a new offensive around the Bab el-Mandeb Strait.

The next move in oil prices will depend on whether supply normalisation proves durable. If Gulf exports remain near pre-war levels, G7 barrels reach the market smoothly, and diesel tightness eases, Brent could drop below $100 and move towards the mid-$90s. However, the downside risks are not straightforward. OPEC+ producers are still pumping below headline quotas, tanker attacks are increasing, and global inventories remain tight after months of disruption.