WTI (the American crude oil grade, the main settlement contract in the US) is rising for the second day in a row and on Friday morning is trading at around $98.80 per barrel - a five-week high. Brent by morning had pulled back to $110.
The Houthis (a Yemeni movement backed by Iran) claimed attacks on the port of Yanbu on the Red Sea, as well as on a Saudi oil field and airport. Saudi Aramco, according to six sources, told employees to leave its headquarters in Dhahran - the first major evacuation since the conflict with Iran began. It is also reported that the US and Israel have prepared plans for new strikes on Iran after the midterm elections on November 3, and energy infrastructure is named as one of the main targets. Ukraine, in parallel, has stepped up attacks on Russian refineries.
Consultants Ritterbusch and Associates attribute the rise to "a new strong dose of risk premium." Deutsche Bank believes investors are pricing in high oil prices all the way through 2027.
Expensive oil has already pushed rates up and stocks down: the yield on ten-year US Treasuries is 5.03% versus 3.97% before the war with Iran, and US gasoline rose 9.1% in September. On Thursday the Nasdaq lost 1.5%, Nvidia fell 2.3%, in Asia the Kospi dropped 3.52% and the Nikkei 225 fell 2.65%.
Upcoming dates: October 28 - the Fed decision (the market currently puts a hike at about 15%, and considers a December one likely), October 29 - the core PCE index, November 6 - the US jobs report.
Watched Brent drive off without you?
Five dollars per barrel in a day is visible to the naked eye. The question is volume: on a deposit of a couple thousand, a candle like that is worth dinner; on an account of a hundred thousand, it's a whole different conversation. In prop trading, the company provides the trading notional: you pay for the evaluation stage, stay within its limits, and get a share of the profit. Geopolitics won't be over by Monday.