Analysts see more oil gains as Hormuz supply fears mount

Oil traders expect prices to keep climbing after Brent touched $110 a barrel on Friday, October 16, for the first time since May. Stalled US-Iran talks and attacks around the Strait of Hormuz are outweighing government efforts to ease shortages, analysts said, according to a Moody's-distributed report on TradingView.tradingview.com

Brent futures for December delivery gained $5.14 on the week, nearly 5%, and settled at $109.86. December West Texas Intermediate futures rose $8.01, nearly 9%, to $99.02, the same report said. The front-month WTI contract settled higher, at $101.41. That left WTI up 10.4% for the week, and Brent's close was its highest since May 19, Reuters reported.finance.yahoo.com+1

Hormuz flows under strain

Attacks around the Strait of Hormuz increased over the past 10 days. Iran said it was stepping up strikes in response to the US blockade of its ports and tougher sanctions imposed last month, according to Reuters. Ship-tracking firm Kpler said traffic through the strait averaged 11.62 million barrels per day in the seven days to October 13. That is about 68% of its 17.15 million bpd baseline, Business Standard reported. Prices also got support from a report of a ballistic missile intercepted on its way to Yanbu, a Saudi Red Sea port used to bypass Hormuz, PFL Petroleum noted. US crude inventories fell by 8.56 million barrels in the week to October 9, partly because hurricanes shut in production, CNBC Comcast Corporation ↘ 0.66% reported.cnbc.com+3

"Crude oil's muted response to a series of bearish headlines signals a market increasingly dominated by physical supply constraints rather than policy-driven optimism," said Navneet Damani of Motilal Oswal Financial Services. He said G7 stock releases, a US-Russia diesel deal and plans to ease sanctions on Moscow's shadow fleet had not produced a lasting price decline, per the TradingView report.tradingview.com

Outlook and inflation pressure

Ajit Mishra of Religare Broking called the firm's outlook "cautiously bullish." He said further geopolitical escalation could lift Brent toward $115 to $120 a barrel. The IEA and the US Energy Information Administration do not expect a broader supply recovery before 2027, the report added. On India's Multi Commodity Exchange, November crude futures gained 6.4% for the week.tradingview.com

The rally reaches beyond crude. Heating oil is up 127% over the past year and Brent about 80%, according to figures from analyst Charlie Bilello highlighted by 24/7 Wall St.. The outlet said the broad energy move could feed into consumer prices over the coming months. ING analysts said a US-Iran agreement could help remove the market's geopolitical risk premium, Grafa reported. Without a political deal, Kpler expects a "slower and more uneven recovery" in Hormuz flows, Reuters reported.grafa.com+2