Oil swings as US denies strike on Iranian naval base

Brent crude climbed back above $110 a barrel on Monday, October 19, after Al Jazeera reported that Iran's navy accused US forces of attacking the Konarak naval base on the country's southeastern coast. The report erased losses from earlier in the day, when prices had fallen after a US move to ease sanctions on Russian energy. The gain did not hold through the close: December Brent settled slightly lower on the day, while WTI ended higher.tradingview.com+1

A disputed attack

Iran's navy said the US military struck the base with "two light projectiles" early Monday and wounded two soldiers at the site in Sistan and Baluchestan province, Al Jazeera reported. "The target of the American forces in the attack on the Iranian navy this morning was a 35mm cannon," the navy said.aljazeera.com

Washington denies the account. A US official told CNN that Iran's claim was inaccurate, and Shafaq News also reported the denial. The base sits on the Gulf of Oman. Traders still read the report as a possible escalation, since President Donald Trump had said his administration was not planning attacks on Iran before the November 3 midterm elections. Treasury yields also rose after the reports.shafaq.com+2

Hormuz flows already squeezed

Supply was already a worry before the base report. Attacks on commercial ships cut crude flows through the Gulf to a seven-day average of about 8.5 million barrels per day last week, down from more than 20 million the week before, according to Kpler data cited by Reuters. Kpler counted at least 10 confirmed incidents involving commercial vessels during the week. On Sunday, a tanker exploded after hitting a mine in the Strait of Hormuz. That raised doubts about claims that the waterway had been cleared of mines.dtnpf.com+1

Yemen's Houthis also said they had attacked Saudi energy, airport and military targets, including an Aramco Saudi Arabian Oil Company facility in Yanbu and the Shaybah oilfield. Reuters could not independently verify those claims.live.euronext.com

Russian waiver offers limited relief

Prices fell early in the day after Trump signed an executive order on Friday waiving some sanctions and tariffs on Russian energy exports, an effort to lower fuel costs before the elections. DTN analysts noted that the first Russian diesel volume planned for October equals about 18 hours of US diesel demand.dtnpf.com+1

"Ongoing strikes on vessels transiting the Strait of Hormuz and flows remaining below pre-conflict levels continue to support prices," UBS analyst Giovanni Staunovo told Reuters. SEB's Bjarne Schieldrop said any rise in Hormuz exports could be short-lived, because Iran may step up attacks before the US vote.live.euronext.com