Oil holds gain as Middle East and Russia strikes threaten supply

OIL held a gain as a flare-up in attacks from Russia to the Middle East threatened supply that only recently recovered to near pre-Iran War levels.

Brent traded around US$106 a barrel after rising 1.3 per cent in the week’s first three sessions, while West Texas Intermediate was below US$95.

A cargo ship sank after being struck by “unknown projectiles” as it transited the Strait of Hormuz, while Teheran-backed Houthis continued to launch missile and drone attacks across Saudi Arabia.

Meanwhile, Russia accused Ukraine of attacking two oil refineries on Wednesday (Oct 14), flouting an “energy ceasefire” promoted by US President Donald Trump. Kyiv denied the claim, which Bloomberg could not independently verify.

Brent has surged more than 70 per cent in 2026 as the US-Iran war roils energy markets. Oil users have been tapping stockpiles, and on-land inventories have fallen to near their lowest in at least a decade, the International Energy Agency (IEA) said on Wednesday.

“If new attacks on oil infrastructure in the Middle East further disrupt petroleum supply in an already very tight physical market, energy costs and inflation would move even higher,” said Bart Melek, global head of commodity strategy at TD Securities.

Russia’s Deputy Prime Minister Alexander Novak said Ukrainian drones targeted refineries in the Saratov and Ryazan regions, Interfax reported.

Ryazan, near Moscow, has a processing capacity of about 400,000 barrels a day and is among the largest oil refineries in the nation.

In the Middle East, a growing number of oil tankers are avoiding areas where they would normally collect crude, suggesting increased Iranian attacks on shipping are complicating export logistics.

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Vessels capable of carrying at least 37 million barrels have stopped or changed course while heading towards loading areas off the United Arab Emirates and Oman, though there is no clear evidence yet that Gulf flows have declined. 

Prospects for a diplomatic easing of tensions remain uncertain. Iranian Parliament Speaker Mohammad Bagher Ghalibaf said the Islamic Republic’s aims are not “Endless War” or prolonged talks, but that it seeks to “wear down the enemy so that it is forced to accept our demands”.

The uncertainty points to a potentially prolonged “frozen conflict”, with periods of positive developments interrupted by fresh attacks that force markets to reassess, said Rob Barnett, senior energy analyst at Bloomberg Intelligence. A return to active conflict could send prices “much higher”, he said. 

Meanwhile, oil production in the UAE climbed to record levels in September, according to the IEA. The former Opec member has been one of the most successful regional producers in restoring flows through the Strait of Hormuz.

In the US, the industry-funded American Petroleum Institute reported nationwide crude inventories fell 11.1 million barrels last week, according to a document seen by Bloomberg.

If confirmed by official data on Thursday, that would be the biggest drop since June 2025. BLOOMBERG