Oil rose 13.6% in October and ended the month near its wartime highs, after a new tanker attack in the Strait of Hormuz and growing fears of US military action against Iran after Tuesday’s election. Goldman Sachs estimates about $27 of the price reflects risk, not actual supply loss.
Brent crude ended October up 13.6%, and US crude rose 15.2%. Both rose for a fourth straight week. On Friday, both gained more than 2%, reaching their highest settlements since late April. The expiring December Brent contract peaked at $117.64, and the front-month contract ended the week around $113.10. WTI settled at $104.12.
What drove?
Two developments in the past week pushed prices higher.
The first was a new wave of attacks on shipping in and around the Strait of Hormuz, including a tanker attack. There were also reports of explosions at Iran’s Jask port on the Gulf of Oman. Jask matters because Iran has developed it as an export route that avoids the strait.
The second was Washington. A senior US military commander reportedly briefed President Trump on military options against Iran, and Trump has repeatedly suggested strikes could resume after the 3 November midterm election. With the vote on Tuesday, traders bought oil as protection against escalation.
There was also some diplomatic activity. Iranian officials confirmed that US Vice President JD Vance had sent a letter aimed at restarting talks. Foreign Minister Abbas Araghchi said Tehran remained open to diplomacy. Trump acknowledged contact with Iran but said it focused on medical supplies, and said he was unsure whether talks would succeed. Those signals briefly pushed oil lower mid-week before Friday’s rise.
Risk premium
Goldman Sachs estimates that the threat of new supply disruption adds about $27 a barrel to Brent. Oil exports from the Gulf have at times recovered to close to pre-war levels, as tankers find routes and the Saudi East-West pipeline carries more crude to the Red Sea. Prices have stayed high anyway.
So roughly a quarter of the price reflects fear of what might happen. That cuts both ways: a credible peace deal could quickly remove most of that premium and bring Brent below $90, while a major US strike could add to it and push prices above $120.
What it means
India imports about 85% of its crude oil. A $10 rise in Brent adds roughly $12–15 billion a year to the import bill, puts pressure on the rupee and pushes up inflation through fuel, transport and fertiliser costs. October’s rise is already showing up: ATF prices rose for a fourth month on 1 November and commercial LPG rose for a second month.
For Indian markets, the next few days are critical. Brent is close to its four-year high, and the US election and its aftermath will likely determine whether the October gains reverse or extend.
Watch for any US military statements after Tuesday, any response from Iran on the Vance letter, further attacks on shipping in Hormuz or on Saudi infrastructure, and the US strategic reserve. The US emergency stockpile is at its lowest level since 1982, so there is limited capacity to release more oil if supply is disrupted.
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