Brent crude oil rose by 0.94% to $114.23 per barrel in trading on Friday, October 23, 2026. This price is the highest level since May 5, 2026. The price increase followed a 4% jump on Thursday, which closed Brent at $113.17. West Texas Intermediate also increased by 84 cents to $100.30.
Reasons for the Increase in Oil Prices in the Market
The main driver of this price increase is the Houthi attacks on Saudi infrastructure and Aramco's order to evacuate its headquarters in Dhahran. This headquarters is not just an office building but serves as an operational command center managing a vast network of onshore and offshore fields, pipelines, refineries, and export terminals. The evacuation of this headquarters and the transition of employees to remote work is the first time this has occurred since the onset of the war in the region.
Read more: Brent Oil Price Reaches $114 per Barrel
The mechanism through which this event impacts oil prices is more through the "perception of risk" rather than necessarily a physical reduction in supply. When the command center of the world's largest oil company is evacuated, the market signals that Aramco's ability to respond to disruptions and maintain production flow is under pressure. This signal raises the risk premium, even if not a single barrel of production has been lost.
Other Developments and Their Impact on the Oil Market
The Kremlin has announced that Vladimir Putin has agreed to resume trilateral negotiations with the U.S. and Ukraine after November 10. This news is seen as a bearish signal from a supply perspective; if the war in Ukraine ends, Russian energy sanctions may be lifted, and global supply could increase. However, the oil market has recently ignored this signal and focused on Middle Eastern risks.
It seems that two scenarios could reverse the upward price trajectory. First, a halt to Houthi attacks or a reduction in tensions in the Red Sea, and second, the release of strategic reserves by consuming countries or an increase in OPEC+ production. However, given that the current disruption is due to geopolitical risk rather than a physical supply shortage, the release of reserves will have a limited effect on the risk premium.
A third scenario that receives less attention is the "alternative routing". If tensions in the Strait of Hormuz and Bab-el-Mandeb escalate, exporters may activate alternative routes such as the East-West pipeline in Saudi Arabia. However, the capacity of these routes is limited and cannot fully replace maritime flow.
Ultimately, the surge in oil prices to $114 is more a reflection of an "infrastructure war" rather than a physical supply reduction. The attack on Aramco's command center signals that the ability to manage Saudi Arabia's oil supply chain has been targeted. The market has responded to this signal with an increase in the risk premium.
There are two limitations to the continuation of this trend. First, if attacks on production facilities and export terminals expand, physical supply will also be disrupted, and prices could rise further. Second, if negotiations between Russia and Ukraine reach a real agreement, global supply will increase, creating downward pressure. In the current situation, the market is weighing ongoing events more heavily and continues on an upward path, but this path is very sensitive to a single event—either an escalation or a halt to attacks.
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