Oil Sprints to a 5-Month High While Tech and Crypto Stumble
Brent crude touched $115.84 on Friday, its highest level since May, as Houthi attacks on Saudi Arabia and fears of new US strikes on Iran drove the move.
The oil price surge occurred amid mixed performance across other energy markets. West Texas Intermediate (WTI) crude rose 1.35% to $100.81, while heating oil gained 1.48% to $5.01 per gallon. US natural gas fell 2.86% to $2.72 per million British thermal units (MMBtu). The rally landed on markets still shaken by a tech selloff, with crypto also slipping as investors pulled back from risk assets.
Gulf Attacks Put Risk Premium on Oil
Yemen's Houthis claimed responsibility for attacks on Saudi energy targets, including an Aramco site in Yanbu and the Shaybah oilfield. Aramco subsequently ordered staff out of its Dhahran headquarters on the Gulf coast. OilPrice noted this suggests the group can now strike beyond its usual Red Sea targets. A pipeline shutdown in Libya also cut output at two fields.
If anything, re-escalation seems the most likely path. As a result, our expectation that ICE Brent would average $80/bbl over 4Q26 is looking unattainable. Even if tensions don't re-escalate, the mere possibility is likely to keep a sizeable geopolitical risk premium embedded in prices.
Tech Selling and Rate Fears
The oil rally coincided with a sharp drop on Wall Street. On Thursday, the Nasdaq Composite fell 2.6% to 26,008.86, while the S&P 500 lost 1.21%. Meta led the decline, falling nearly 7% after raising its 2026 spending floor to $135 billion. Crypto markets also suffered, with total market capitalization falling 3.74% to $2.76 trillion.
Analyst Benjamin Cowen connected the volatility to oil, noting that higher crude prices feed inflation expectations and strengthen the case for tighter Fed policy. Traders currently see about an 83% chance that the Fed holds rates at its October 27-28 meeting, though renewed energy gains could shift those odds.
Key Tests Ahead
Next week brings two critical tests. The Fed announces its rate decision on October 28, while Microsoft, Amazon, and Alphabet report earnings. Whether Brent crude holds above $115 into those events may determine how quickly risk appetite returns to markets.
Related
