Brent crude nears $115 as Middle East tensions heighten supply risks, weaken Asian currencies and fuel inflation across major importing economies.
Brent crude futures fell 44 cents, or 0.38%, to settle at $114.88 a barrel on Thursday, October 29, and U.S. West Texas Intermediate (WTI) crude lost 78 cents, or 0.76%, to $102, as hopes for peace talks between Washington and Tehran offset fears of new supply disruption, according to settlement figures reported that evening. Both benchmarks had fallen more than $2 during the session before fresh Houthi claims of attacks on Saudi oil sites helped push prices back up. In early Asian trade on Friday, October 30, Brent rose 86 cents to $115.74 at 01:22 GMT (6:52 a.m. India Standard Time, UTC+05:30), on course for a monthly gain of nearly 14%.
Brent's modest decline on Thursday did little to alter the broader picture: geopolitical risks across several fronts continue to support oil prices. For Asia's major fuel importers, the pressure comes through three channels at once: higher dollar-denominated import bills, weaker currencies that increase the local cost of each barrel, and inflation that is prompting tighter monetary policy.
The most direct of those risks this week came from Yemen's Iran-aligned Houthi movement. Its military spokesman, Yahya Saree, posted on October 27 that a ballistic missile had targeted "the Ras Tanura refinery in the Eastern Province" and caused "massive fires." The Ras Tanura complex on Saudi Arabia's Gulf coast has a refining capacity of up to 550,000 barrels a day. On October 29 the group said it had attacked Ras Tanura again, along with the Rabigh refinery and an Aramco facility in Abqaiq, and Saudi Arabia did not immediately confirm those claims.
Satellite imagery offers preliminary evidence of damage at the refinery, although Saudi authorities had not officially confirmed any damage as of October 29. The imagery appears to show a hit on a cracking unit, while open-source analysts reported that flaring had stopped, suggesting that operations had been suspended or curtailed.
Damage to the refinery does not necessarily mean that Saudi Arabia's crude exports have declined. Available shipping data suggest that crude loadings continued at nearby export terminals. Energy commentator Javier Blas counted nine very large crude carriers loading at once at Ras Tanura and Juaymah, with a combined capacity to carry 18 million barrels, and estimated that Aramco had fully recovered its prewar crude export volumes. Nearly all of the kingdom's oil exports flow through two main ports, Ras Tanura on the Gulf and Yanbu on the Red Sea.
Uncertainty over Israel's next government adds another layer to the regional risk outlook. The election produced no clear parliamentary majority, leaving the country's political leadership and its future approach to the conflict with Iran unresolved. Election officials released complete results on October 29 that gave Prime Minister Benjamin Netanyahu's bloc 53 seats in the 120-member Knesset and the bloc backing his main rival, Gadi Eisenkot, leader of the Yashar party, 48. Arab-led parties won a combined 19. A government needs at least 61 seats.
The final count confirmed the earlier seat distribution, leaving neither leading bloc with a parliamentary majority. As of 9 p.m. Israel Standard Time (UTC+02) on October 28, more than 500,000 double-envelope ballots cast by soldiers, diplomats and others away from their home polling stations had remained to be tallied. Both leading blocs have ruled out governing with the two main Arab parties, Ra'am and the Joint List.
The next stage of the process rests with President Isaac Herzog. The results must still be certified and submitted to him on November 4, after which he will consult party leaders and choose the candidate he judges most likely to form a government. Herzog said "we must do everything we can, certainly after yesterday, to avoid another round of elections." Officials at the President's Residence said the mandate would not necessarily go to the leader of the largest party, and the first candidate will have 28 days to form a coalition, with a possible 14-day extension.
That leadership question carries weight for Iran policy. Netanyahu declared that Israel had a historic opportunity alongside President Donald Trump to remove the Iranian threat "once and for all." As caretaker prime minister until a new government forms, Netanyahu leaves that policy without a clear long-term owner for at least several weeks.
Uncertainty over Israel's next government is unfolding alongside mixed signals from Washington. The Trump administration has kept the possibility of military action open while continuing to explore diplomatic channels with Tehran.
Asked about possible strikes on Iran after the November 3 U.S. midterm elections, Trump told reporters, "I can't tell you that. But anything is possible." The senior U.S. officer overseeing the Middle East met Trump at the White House on October 29 to outline military options in Iran, according to a report that day citing U.S. officials.
The diplomatic outreach has yet to produce a response from Tehran. Vice President JD Vance sent a letter to Mohsen Rezaei, secretary of Iran's Supreme National Security Council, through Qatari mediators, according to an account of the letter published on October 29. Trump said the outreach was meant to help Iran obtain medical supplies. Tehran had received the letter but not answered it, Iranian state-linked media reported on October 29, adding that Iran wants its conditions met and that "any position that contradicts this framework is unacceptable."
Qatar's separate effort has drawn conflicting accounts. An official briefed on the negotiations said Qatari mediators had presented Tehran on October 25 with what the official described as a draft deal that set out a seven-day timeline of daily confidence-building steps. A senior Iranian official rejected that characterization, saying Qatar had offered "unacceptable ideas and not an offer." Iran's foreign minister said on October 28 that Tehran was still giving diplomacy a chance.
Even if diplomatic efforts reduce the immediate risk of escalation, additional supply is unlikely to provide a near-term cushion. Three people familiar with the discussions said on October 27 that seven core members of OPEC+ (the Organization of the Petroleum Exporting Countries and its allies), including Saudi Arabia and Russia, were expected to keep their December output targets unchanged at their November 1 meeting. Conflict-related disruptions have left actual Gulf output well below quotas.
Asia is where these risks turn into costs. Official and market data published between October 14 and October 30 show the strain arriving differently in each major importer.
India's exposure shows first in its import bill. Crude imports cost $90.6 billion in April-September, the first half of the 2026-27 fiscal year, up 46.3% from a year earlier, while volumes were almost unchanged at 122.7 million tonnes, according to Petroleum Planning and Analysis Cell (PPAC) data reported on October 21. Price, in other words, drove the increase.
The price India pays climbed further in October. The Indian crude basket averaged $120.46 a barrel through October 26, compared with $116.77 in September and $90.19 in August, the highest monthly average since March 2012. The rating agency ICRA estimates that each $10 rise in the annual average crude price adds about $12 billion to $13 billion to net oil imports and widens the current account deficit by 0.3% of gross domestic product.
Currency weakness compounds that bill. The rupee traded at 95.08 per dollar on October 27, and Jateen Trivedi, vice president for commodity and currency research at LKP Securities, said, "Elevated crude prices continue to pose a challenge for the domestic currency." The Reserve Bank of India raised its policy repo rate by 25 basis points to 5.5% in October and lifted its consumer inflation projection to 5.2%. Wholesale price inflation rose to 11.4% in September.
The Philippines is a sharper example of currency depreciation. The peso closed at a record low of 64.17 per dollar on October 27, its seventh straight record close, according to Bankers Association of the Philippines data. Traders cited soaring crude prices as one of the pressures on the currency.
Monetary policy there has already moved. The Bangko Sentral ng Pilipinas raised its key rate by 50 basis points to 5.5% on October 22, saying "Renewed tensions in the Middle East have driven global oil prices higher." Inflation reached 7.2% in September. Domini Velasquez, chief economist at China Banking Corp., said the peso's fall despite the hike "reinforces our view that rate hikes alone may not be enough to reverse the peso's depreciation."
South Korea presents a contrasting case. Unlike the Philippines, where currency depreciation has amplified the pressure from higher oil prices, a stronger won helped cushion the increase in import costs. Won-denominated import prices rose 1.7% in September from August and 17.6% from a year earlier, with crude import prices up 21.6% on the month, according to preliminary Bank of Korea data. The won strengthened 3.4% against the dollar over the same period, cushioning the effect of the 4.9% increase in import prices measured in contract currencies.
Japan is a case where government subsidies have limited the direct impact, although the indirect effect is visible. Core inflation, which excludes fresh food, rose to 2.1% in September from 1.7% in August, while consumer energy prices fell 0.6% because of government subsidies, according to data released on October 23. Abhijit Surya, senior Asia-Pacific economist at Capital Economics, said that "the indirect effects of the energy shock are continuing to feed through."
The Bank of Japan (BOJ) kept policy on hold on October 30, leaving its policy rate at 1.25% in an 8-1 vote and declaring underlying inflation "generally consistent" with its 2% target for the first time since 2013, according to the decision announced in Tokyo. The BOJ raised its fiscal 2027 inflation forecast to 2.6% from 2.4%, and board member Hajime Takata dissented in favor of a rise to 1.5%.
While Japan has used subsidies to limit the direct impact of higher energy costs, China's latest data point to a different pattern: lower crude imports alongside a substantial drawdown in onshore inventories. China imported 37.1 million metric tons of crude in September, or 9.03 million barrels a day, down 21.5% from a year earlier, according to customs data. The analytics firm Vortexa recorded a 57 million-barrel draw in onshore crude inventories that month, the largest in its records.
The effects are more directly visible in consumer prices in Australia, where transport costs have risen sharply alongside higher fuel prices. The Australian Bureau of Statistics said on October 28 that consumer prices rose 4.3% in the 12 months to September, with transport up 8.7% on higher fuel prices. Rachael McCririck, the bureau's head of price statistics, said automotive fuel prices rose 9.4% in September, "driven by higher world oil prices."
The data point to a common direction of pressure, but the extent of the impact varies with each economy's ability to absorb higher energy costs. Japan's subsidies and South Korea's stronger won have limited the pass-through, while India and the Philippines face the combined effects of higher oil prices and weaker currencies. China's inventory drawdown provides another point of contrast.
By October 30, the evidence pointed to a market supported by overlapping geopolitical risks rather than a single confirmed supply disruption. The effects were already visible across Asia, where higher crude prices were feeding into import costs, currencies and inflation. At Ras Tanura, however, evidence of refinery damage coexisted with indications that nearby crude loadings had continued.
What remains uncertain is how long the Ras Tanura refinery will remain out of operation and how much of the oil-price premium reflects actual supply losses rather than geopolitical risk. An official Saudi account of the damage, together with further evidence of refinery operations and crude loadings, would help clarify the supply outlook. Separately, Iran's response to the Vance letter and Washington's actions after November 3 will indicate whether the risk of further escalation is rising or receding.
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