Brent crude advanced to $110 per barrel on Friday, its highest level since May, raising fresh questions about the durability of the federal government's 30-day petrol discount window. The global benchmark rose 3.7%, notching a second consecutive weekly gain as market participants built positions ahead of the weekend in anticipation of further supply disruptions.
The upward move followed continued attacks by Iran-backed Houthi rebels on Saudi Arabia and renewed strikes by Russia and Ukraine against energy infrastructure, intensifying worries over crude and refined product flows. The $110 mark was last recorded nearly five months ago, when disruptions to global crude and fuel movements produced a fragile agreement that briefly reopened the Strait of Hormuz.
Prospects for supply relief remain clouded. While US President Donald Trump has maintained that Russia will proceed with releasing several hundred million barrels of diesel to the global market, ongoing assaults on Russian energy infrastructure, including a Reuters report of an attack on the Ryazan refinery, have undermined confidence in the plan. On Friday, US lawmakers introduced legislation to block the arrangement with Moscow, citing concerns that it could hand Russia additional revenue to finance its war. The continued exclusion of Russian diesel from international markets has compelled refineries elsewhere to increase crude processing, straining global refining capacity.
"After a brief reprieve, the oil market is having to price risk back in, particularly heading into the weekend," Rebecca Babin, senior energy trader at CIBC Private Wealth Group, told Bloomberg.
Diesel futures settled at $4.90 per gallon in New York, with both diesel and gasoline contracts trading at their highest levels for this time of year.
Escalation risks in the Persian Gulf are also weighing on sentiment. In a Newsmax interview, Trump declined to rule out using the weapon commonly called the "Mother of All Bombs" against Iran after the November 3 US midterm elections. CNN separately reported that the US has prepared strike plans that could involve the GBU-43/B Massive Ordnance Air Blast bomb. Eurasia Group raised its probability of further conflict escalation to 65%, up from 35% previously.
"The conflict is likely to escalate," the analysts wrote, adding that "the standoff status quo is no longer sustainable for the US."
