Brent crude oil prices climbed close to $112 per barrel on Thursday, approaching the four-year high of $114.44 per barrel recorded on May 4, according to data from Trading Economics. The surge in energy markets is largely driven by reports that the administration of US President Donald Trump is considering additional military and nuclear strikes against Iranian targets following the November congressional elections. Markets are reacting to fears that renewed conflict could further disrupt crude flows through a region responsible for a major share of global petroleum exports.
The United States administration faces competing economic pressures as it attempts to curb domestic fuel price inflation, which increases the cost of living for American households. Higher gasoline prices threaten to complicate the political standing of Republicans, who face analyst warnings that they risk losing their majorities in both the House of Representatives and the Senate.
Geopolitical Risks Drive up Oil Transport Costs
Market anxiety has intensified following attacks on targets in Saudi Arabia and security incidents near the Strait of Hormuz, a crucial shipping lane carrying roughly one-fifth of global oil supplies. While physical crude exports from the region remain relatively stable, commodity traders are pricing in escalating geopolitical risk and the potential for severe supply disruptions.
Oil exports from the Persian Gulf in October stood at 91 percent of January and February levels, with Saudi shipments running 10 percent higher, while Iran has exported zero oil since the renewal of the US embargo on July 14. Despite steady export volumes, Brent crude contracts with the nearest delivery month climbed to $110 per barrel, sitting 80 percent above pre-war levels. Surging tanker transportation costs—triggered by the September attack on a Saudi pipeline and subsequent attacks by Iranian Revolutionary Guards on ships in the Strait of Hormuz—have added an estimated risk premium of at least $20 per barrel.
Brent Crude Trades Near Multi-Month Highs
Financial analysts monitoring technical indicators note that Brent crude is trading near multi-month highs, demonstrating that recent market corrections failed to break the broader upward trend. The Relative Strength Index (RSI) has steadily climbed toward overbought territory above the 70 threshold, signaling strong buying momentum despite short-term correction risks.
The first major technical resistance level sits at the May 18 peak of $114.90 USD. A decisive break above this barrier could attract renewed buying interest and clear a path toward $120.50 USD, with subsequent focus shifting to the psychological resistance level of $125.00 USD. Conversely, a drop below $110.00 USD could weaken the current upward trajectory and trigger a short-term correction.
Low Factory Utilization Weighs on Industrial Demand
Global industrial indicators present a contrasting picture of demand. Data from BloombergNEF indicate that worldwide sales of passenger cars are projected to reach around 85 million this year against total manufacturing capacity of 142 million, leaving factory utilization at just 60 percent. Because manufacturing lines carry high overhead costs, producers continue to accept lower margins and push production volumes outward rather than halting operations.
China’s gross domestic product grew by 4.5 percent in the third quarter largely driven by exports, while domestic retail sales rose by just 1.1 percent in September. Short-term consumer loans in China dropped by 8.3 percent year-on-year in September, marking the largest decline in the history of measurement, which forces domestic manufacturing surpluses to flow into international markets, including Europe.
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