Oil Prices Surge on Ongoing Middle East Supply Concerns

Oil prices surged for the second consecutive session as concerns over Middle East supply disruptions continued to weigh on markets. The US-Israeli war on Iran remains a dominant risk, with energy prices and inflation expectations taking center stage.

Crude exports from major Middle Eastern producers rose to 12.8 million barrels per day in September, according to preliminary figures from data provider Kpler. This increase is largely due to increased shipments from Saudi Arabia and the United Arab Emirates.

Despite this, oil prices remain elevated due to less efficient and more costly 'workarounds' such as ship-to-ship transfers. Brent crude futures for November rose $1.71, or 1.6%, to $106.99 a barrel, while US West Texas Intermediate crude was at $94, up $1.4, or 1.5%.

UOB analysts warn that the US-Iran standoff and its implications for energy prices and inflation expectations remain a major concern. Iranian officials have expressed pessimism about reaching a deal before the Strait of Hormuz situation escalates further, keeping oil supply uncertainty elevated.