AI-assisted research analysis by FutureKnowledge. Sources checked 21 October 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
Brent crude touched $111.99 a barrel on 20 October, its highest in five months, and traded back above $110 on 21 October as attacks on tankers spread beyond the Strait of Hormuz. For India, which buys most of its oil abroad, the move lands on top of an import bill that is already up 46% this year.
What happened to Brent crude this week
Brent futures hit the five-month high on Tuesday before settling 0.7% lower at $108.79, after reports that Iran’s president had discussed mediation with Pakistan’s army chief, according to HDFC Sky and The Sunday Guardian. The expiring November WTI contract ended 1.8% lower at $101.79. On Wednesday, Brent was up $1.32 at $110.11 by 07:47 GMT and WTI was at $99.00, Reuters reported (via Central Oregon Daily).
Three factors stood out:
- Tanker attacks are spreading. Ship-tracker Kpler counted at least 18 attacks on vessels in two weeks. LSEG analysts said tankers were being targeted as far south as the Gulf of Oman, putting at risk crude loadings outside the Persian Gulf and the ship-to-ship transfers used to work around Hormuz. A supertanker caught fire after reportedly striking a sea mine south of the strait, and Iran’s Revolutionary Guards navy said the vessel had violated Iranian rules, per Iranian media.
- Saudi energy sites are being targeted. Yemen’s Houthis claimed attacks on Monday on a Saudi Aramco site at Yanbu, the Shaybah oilfield and airports in Riyadh and Abha. Coinpaper noted these claims had not been independently confirmed and there was no verified evidence of lost output.
- US stocks are falling. Industry data from the American Petroleum Institute showed US crude inventories fell 4.9 million barrels in the week to 16 October, against a Reuters poll forecast of about 800,000 barrels, with fuel stocks also lower. US Energy Department officials said they were working with refiners worldwide to raise fuel output amid a diesel shortage.
Why oil prices are rising even as Gulf exports recover
The rally comes despite a partial recovery in Gulf supply. The International Energy Agency’s October Oil Market Report, published on 14 October, said Gulf crude exports rose by 4.4 million barrels a day in September to 13.9 million barrels a day, more than 75% of pre-war levels, and flows through Hormuz rose to 10.9 million barrels a day. Bypass exports, mainly via Saudi Arabia’s East-West pipeline, reached 5.6 million barrels a day.
That is why the new pattern of attacks matters. Bypass routes and offshore transfers in the Gulf of Oman are now carrying a much larger share of the region’s oil: Kpler estimates about 40% of non-Iranian Gulf crude exports avoided Hormuz in September, up from 17% before the war, according to The Sunday Guardian. Strikes on Yanbu, the main Red Sea outlet, and on tankers outside the strait threaten exactly the routes that have been filling the gap.
Buffers are also thin. The IEA said global observed oil inventories were 509 million barrels below end-February levels and that diesel availability was 1.7 million barrels a day lower year on year in the third quarter. The agency expects the diesel shortage to last well into 2027, as reported by The National, which also noted that about 96 million of the 400 million barrels pledged for emergency release in March had not yet been delivered.
One nuance: futures are not the whole picture. The IEA said physical Dated Brent averaged $116.89 in September and was around $134 when its report was written, well above the futures price, a sign that prompt physical cargoes remain especially tight.
How higher oil prices affect India
India’s exposure runs through the price of the cargoes it actually buys. The Petroleum Planning and Analysis Cell’s Indian crude basket averaged $116.09 a barrel in September, and about $121.25 so far in October, according to OilPrice.com citing PPAC data. The April–September import bill rose 46.3% to $90.6 billion on roughly flat volumes, as we detailed in our analysis of India’s crude import bill. Freight on the Ras Tanura-to-India route has risen three- to fourfold since the war began on 28 February, OilPrice.com reported.
The rupee opened at 94.78 to the dollar on 21 October, slightly firmer than Monday’s 94.93, per The Sunday Guardian, helped by hopes of a US-India trade deal. A sustained rise in crude would work against that, widening the trade deficit and adding to imported inflation. We set out how the oil shock is feeding into India’s interest rates in our earlier piece on oil above $100.
Who is more or less exposed
- More exposed: fuel retailers if pump prices are held; airlines; paint, chemicals and plastics makers; logistics firms facing high diesel costs; and importers paying higher freight and insurance.
- Less exposed or potential beneficiaries: upstream oil producers that sell at market-linked prices, and dollar earners with limited fuel use, such as IT services exporters.
Scenarios to watch
The table below sets out conditional scenarios, not predictions.
| If… | Then a plausible effect is… | Signal to watch |
|---|---|---|
| Iran-related mediation through Pakistan or Qatar makes visible progress | Part of the risk premium could come out of Brent, as briefly happened on 20 October | Official statements from Tehran, Islamabad, Doha or Washington |
| Attacks hit Yanbu or Gulf of Oman loadings with confirmed supply losses | Bypass routes could falter and physical prices could rise further | Kpler and LSEG shipping data; Saudi Aramco statements |
| US and European diesel stocks keep falling into winter | Diesel cracks could stay high even if crude steadies | Weekly US government inventory data; IEA November report |
| Indian basket stays above $120 | Pressure on the rupee, the trade deficit and fuel retailers’ margins could build | PPAC monthly data; RBI currency intervention |
What to watch next
- Official US Energy Information Administration inventory data, due on 21 October, to confirm or contradict the API draw.
- Any confirmation from Saudi Arabia of damage at Yanbu or Shaybah. The Houthi campaign has already led Riyadh to postpone its flagship investment conference, as covered in our report on the Future Investment Initiative delay.
- The pace of G7 emergency stock releases, which leaders pledged on 2 October to accelerate with a focus on diesel.
- October Indian basket and import data from PPAC.
Bottom line
Brent’s return to five-month highs reflects rising risk to the routes replacing Hormuz more than a new loss of supply. With inventories far below pre-war levels and diesel short, markets have little cushion. For India, crude above $110, and an Indian basket above $120, keeps the pressure on the import bill, the rupee and fuel-intensive businesses until either diplomacy or safer shipping changes the picture.
Method note
We compared market reports from Reuters (as republished by Central Oregon Daily), HDFC Sky, The Sunday Guardian, Grafa, Coinpaper, OilPrice.com and The National with primary data from the IEA’s October Oil Market Report and PPAC. Intraday prices differ slightly between outlets because they were taken at different times; we give the time where reported. Houthi claims are reported as claims.