The oil market remains volatile as tensions in the Strait of Hormuz and the Saudi-Houthi conflict drive prices higher. October has seen a sharp increase in maritime attacks, with over 30 incidents recorded in the region, up from 14 in September. Recent attacks on a crude tanker in Iraq’s exclusive economic zone indicate that Iran's targeting extends beyond vessels attempting to bypass Hormuz. VLCCs, the largest crude tankers, account for 28% of drone and missile attacks in the Persian Gulf, with 32 ships impacted, representing nearly 4% of the global VLCC fleet. Freight rates from the Gulf remain elevated, with a Saudi Arabia-China voyage still costing around $33 per barrel, while regional demurrage rates have climbed to $1,000,000 per day. UKMTO, a maritime security provider, notes that reporting on strikes is becoming more challenging as ships avoid detection and charterers hesitate to raise freight rates further.
Meanwhile, major energy deals continue to shape the market. U.S. gas producer EQT agreed to acquire Range Resources in a $13 billion all-stock deal, creating the largest U.S. gas company. Ovintiv will acquire Canada’s Logan Energy for $0.9 billion, adding significant production and acreage. BP is advancing exploration in Venezuela’s Loran gas field, while ExxonMobil reported a commercial discovery in Guyana. ENI is constructing its Cronos project offshore Cyprus, aiming for first gas in 2028. These developments underscore ongoing investment and exploration activity despite geopolitical uncertainties.
As the U.S. approaches its midterms, expectations of heightened hostilities remain high. Last-minute diplomatic efforts by Qatar and Pakistan aim to de-escalate tensions, temporarily capping Brent at $115 per barrel. OPEC+ is expected to maintain December output targets, with seven core members focusing on 2027 production quotas. The U.S. is also considering extending its truce with China on port charges, while the Houthis strike Saudi Arabia’s largest refinery, disrupting operations. These events highlight the interconnected nature of global energy markets and the impact of geopolitical developments on supply and pricing.