Energy

Brent settled at $109.86 on 16 October, up 3.7% and its highest since mid-May, and WTI at $101.41, up 10.4% on the week, as the Iran war, in its eighth month, threatened Gulf supplies, Reuters reported. The U.K. maritime monitor recorded at least 10 attacks in or near the Strait of Hormuz in the week, a wartime weekly high, and 23 this month. Over the weekend Iran's Revolutionary Guards said a supertanker carrying more than 2 million barrels hit a mine, Saudi forces downed drones and ballistic missiles, and Riyadh residents received an air-threat alert; U.S. Central Command says about 97% of transits succeed.

Why it matters here: Brent and WTI funds price the Gulf supply risk directly, and producers and refiners in the energy-equity funds earn more with crude above $100 and wholesale diesel at $220 a barrel, so escalation lifts both the commodity and the equity sleeves of this class.

Counterpoint: The IEA and G7 releases, the U.S. waiver that keeps Russian barrels and diesel flowing, and Julius Baer's view that Gulf flows have largely recovered could all cap prices, and crude is already stretched after a 10.4% weekly gain in WTI.

The Energy Information Administration reported on 15 October that working gas in Lower 48 storage rose 67 billion cubic feet to 3,567 Bcf in the week to 9 October. That is 45 Bcf, or 1.3%, above the five-year average, but 143 Bcf, or 3.9%, below a year earlier.

Why it matters here: A storage cushion above the five-year average heading into winter limits the risk premium in front-month U.S. gas futures, which is what the natural gas fund holds.

Counterpoint: Stocks are 3.9% below last year, and the Gulf disruption keeps global demand for U.S. LNG exports strong, which could tighten the domestic balance faster than the storage cushion suggests.

The International Energy Agency agreed to release more than 20 million barrels to the market, citing a surge in diesel prices, The National reported, and G7 leaders pledged 100 million barrels of diesel and other reserves to support the coordinated release. The IEA expects the diesel shortage to persist into 2027, with inventories not recovering until the second half of that year.

Why it matters here: Released barrels add prompt supply to the crude balance, damping the risk premium in Brent and WTI funds and limiting how far the Gulf shock can push front-month prices.

Counterpoint: Brent still rose 3.7% to $109.86 the day after the decision, and the IEA itself expects the diesel shortage to last into 2027, which suggests the releases are too small to change the balance against disrupted Gulf flows.

President Trump's order of 16 October waived tariffs of up to 100% on top buyers of Russian crude and gas, including China and India, and duties of up to 500% on Russian goods, CNBC reported. It follows a temporary waiver of sanctions on Russian diesel exports through April 2027. Rubio said the 60-day pause lets the administration assess the impact on the global economy amid energy disruptions.

Why it matters here: By removing the threat to Russian export volumes, the waiver keeps Russian crude and diesel flowing to China and India and loosens the global balance at the margin, removing an upside risk to Brent and WTI.

Counterpoint: The waiver only preserves the status quo for 60 days rather than adding supply, and the loss of Gulf flows dwarfs any Russian effect on the crude balance.