Brent Oil Price Hits $110 as Hormuz, Saudi and Russia Risks Stack Up

Brent crude touched $110 a barrel on Friday for the first time since 19 May, before settling at $109.86, up 3.7% on the day. Three pressures drove the Brent oil price higher at once: attacks on shipping in the Strait of Hormuz, Houthi strikes on Saudi Arabia and the collapse of a Russia-Ukraine energy truce. The pressure has already reached the pump, where US diesel now averages about $6.33 a gallon.

The conflict is now about seven months old. The question in the market has shifted from whether supply is disrupted to whether that disruption is a lasting loss of barrels or a risk premium that could unwind just as quickly.

Here is a way to separate what is actually driving the price from what is only being priced in, along with the scenario range the major banks are working with.

What drove Brent to $110, and why the settlement numbers matter

The settlement figures show a market moving fast, with the US benchmark moving fastest.

WTI closed at its highest since 17 September. The rally came from three separate threads that pulled tight in the same week:

• Iranian attacks on vessels in the Strait of Hormuz
• Houthi missile and drone strikes on Saudi energy infrastructure
• Ukraine’s vow to resume strikes on Russian refineries

Hormuz and Red Sea shipping

US Central Command (CENTCOM) said an Iranian Revolutionary Guard Corps projectile hit the Singapore-flagged GFS Pride, which caught fire and sank under tow. All 21 crew were evacuated. Reporting suggests the ship was hit on 13 October and sank the following day.

Counts differ. CNBC reported at least nine ships attacked since 11 October, while a regional tally recorded four on Tuesday and six on Sunday. An Iranian claim that a mine was involved has not been verified, and CENTCOM says main routes are clear of mines, with more than 40 ships transiting in 24 hours.

The Strait of Hormuz chokepoint concentrates a large share of seaborne crude and product flows into a single narrow lane, which is why even unverified incident reports can move prices within hours.

Saudi infrastructure under fire

Saudi Arabia intercepted missiles over the Red Sea on Friday, one aimed at the Yanbu export terminal. That matters because the East-West pipeline was carrying crude toward Yanbu to avoid Hormuz. The escape route has become a target.

An Aramco building in Dhahran was hit on 13 October, and a strike on Riyadh’s airport on 10 October killed 12. Threats issued on 8 October named the 400,000 b/d Jizan refinery.

Russia-Ukraine truce collapse

A Trump-backed energy truce failed as Moscow kept hitting Ukrainian infrastructure, prompting President Volodymyr Zelenskyy to promise retaliation on Russian refineries.

Because the risks are stacked, a single de-escalation headline would not necessarily pull the price back down.

Why diesel is moving faster than crude

The AAA national diesel average stood at $6.3261 a gallon on 16 October, up about 73.4% from $3.6491 a year earlier. For truckers, farmers and builders, that is the war showing up as a fuel bill.

Why products react more than crude

The shock reaches the pump in four steps:

1. Attacks delay tankers and shrink the pool of willing shipowners.
2. War-risk insurance jumps; S&P Global says premiums rose from roughly 1-3% of hull value to 7.5-10% within weeks.
3. Rerouting lengthens voyages through limited, exposed bypass routes.
4. Thin product inventories absorb the squeeze, while refineries struggle to swap crude grades and Ukrainian strikes remove Russian refining capacity.

Diesel differential S&P Global’s October analysis put the diesel differential at about $38 a barrel, reflecting shipping risk, insurance, freight and delays.

Product markets are regional, so one disruption can strand a deficit in a single area, and short-run diesel demand barely bends. The International Energy Agency (IEA) found crude export losses were smaller in percentage terms than losses in refined product and LPG exports. Goldman Sachs expects supply shocks to hit refined fuels and natural gas harder than crude.

If you hold refiners or transport stocks, or carry freight costs, product spreads tell you more than Brent alone. Diesel can stay high even if crude settles.

The record diesel crack spread of roughly $107 a barrel in early September shows how far refined product pricing had already decoupled from crude before the latest Brent rally began.

Goldman, JPMorgan and the $80 to $125 range: what analysts expect next

The forecasts span more than $40 a barrel, and the width is the message: everything hinges on how long the disruption lasts.

Goldman’s Daan Struyven said shipping risk has become a major price driver. Later coverage pointed to a 2027 average of roughly $80-85. The $80 and $120 markers are Goldman scenarios, not consensus.

JPMorgan’s stance is the most revealing. Its earlier recovery case had Brent averaging $80 in Q4 and about $78 by year-end, yet its 16 October note stepped back from any single forecast.

JPMorgan’s position The bank says the war’s path cannot be reliably modelled, and many economic thresholds it expected to be avoided were crossed by month seven.

Treat these numbers as conditional maps. Your view depends on which assumption looks likelier: normalised Hormuz flows or prolonged disruption.

Readers wanting the full picture beyond 2026 can use our deep-dive into 2027 Brent forecasts, which shows why bank targets diverge by more than $30 a barrel.

Supply loss or risk premium? The test that decides the next move

The case for lasting supply loss

The IEA expects supply to fall about 5.7 mb/d (million barrels a day), with Gulf recovery delayed into 2027. Saudi output has fallen and Houthi strikes are damaging coastal export infrastructure, which cannot be fixed by a ceasefire alone.

The case for a fading premium

Bypass pipelines and naval escorts have limited crude losses, and Goldman’s base case assumes normalisation. History supports caution about extrapolating spikes.

Counterweights matter too. The IEA sees demand down 2.5 mb/d year-on-year in Q4 and 2.6 mb/d across 2026. Strategic reserve releases can ease shortages but cannot repair ports; independent commentary puts the US reserve near 283 million barrels, though that is not an EIA figure. OPEC+ spare capacity remains unquantified.

Depleted global oil stockpiles limit how much cushion strategic releases can provide, since drawing down inventories already under strain leaves less buffer for any later disruption.

Three signals will settle the debate:

• Repair timelines for Saudi and Gulf export infrastructure
• War-risk insurance premium levels
• Diesel and product spreads

What the $110 print does and does not tell you

The $110 level reflects stacked risks rather than one event. The forecast range turns on duration, and diesel is where the pressure concentrates.

That leaves a short watchlist: Hormuz incident counts and insurance premiums, the safety of Saudi export routes through Yanbu, and the pace of Ukraine’s refinery campaign. If all three ease, history points to a premium that fades. If infrastructure damage lingers, the structural case gains weight.

Your decision is less about predicting a number than about judging which of those conditions holds.

Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.