Oil falls from five-month high as supply intact despite fighting

[TOKYO] Oil slid from a five-month high as traders weighed signs that Middle East oil supply is holding near pre-war levels against ongoing flareups in regional fighting.

Brent crude traded near US$108 a barrel after jumping almost 4 per cent on Friday (Oct 16), while West Texas Intermediate declined toward US$100.

A Saudi helicopter crashed near the border with Yemen and Houthi rebels targeted Yanbu, a crucial export hub, while UK Maritime Trade Operations said two tankers reported being hit in the Persian Gulf.

Still, supply seems to be moving.

US Energy Secretary Chris Wright told Fox News that Persian Gulf oil flows had recovered to about 80 per cent of their pre-conflict level, although refined product shipments remained constrained.

Wright said he is in talks with European allies to release diesel stockpiles.

Global benchmark Brent has surged more than 75 per cent in 2026 so far as widening hostilities in the Middle East and the Russia-Ukraine war curbed supply.

Physical markets continue to signal tightness and refined products such as diesel have rallied harder than oil, boosting inflation and weighing on the global economy.

Brent is caught between heightened geopolitical risk and increasing flows from the Middle East, according to June Goh, a senior oil market analyst at Sparta Commodities.

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“The markets seem unwilling to absorb the higher prices with the rest of the economy not looking rosy,” she said, adding that Brent is likely to remain rangebound around US$100 a barrel.

Meanwhile, US President Donald Trump said the US cut a diesel export deal with Russia and waived tariffs and sanctions on the country’s energy shipments to preserve the Kremlin’s peace talks with Ukraine.

US lawmakers introduced a bill to block the fuel purchases as Moscow and Kyiv traded tit-for-tat attacks.

In a push to end the four-year conflict, Russian President Vladimir Putin proposed talks with Trump and Chinese leader Xi Jinping in November, TheWall Street Journal reported.

While Moscow confirmed discussions were taking place, a senior US official said Trump had not agreed to such a summit, the newspaper said. BLOOMBERG