Oil Prices Hover Near $105 as Geopolitical Tensions Influence Market

Brent crude settled near $105 a barrel on Friday as a series of geopolitical developments kept oil markets cautious. Frequent transits through the Strait of Hormuz and Iranian drone attacks have created a price equilibrium, while the Gulf of Mexico’s offshore production returned to pre-Hurricane Isaias levels after offline capacity fell to about 200,000 barrels per day.

The Yemeni Houthi militia damaged Saudi Aramco’s Dhahran headquarters with drone strikes and warned of further attacks on airports and oil facilities, raising concerns over Saudi export flows. In Europe, the International Energy Agency warned that global diesel supplies could remain tight through 2027, noting a 1.7 million barrel-per-day decline in diesel production year-on-year.

China’s refined-product exports peaked at a four-year high in September before falling sharply in October, reflecting recent policy adjustments. Meanwhile, U.S. President Donald Trump announced plans for expanded oil, gas and mineral exploration in Greenland, despite a 2021 ban on new drilling there.

Energy tensions also resurfaced in the Russia-Ukraine conflict, where Ukraine resumed attacks on Russian refineries after a brief truce allegedly brokered by President Trump, targeting Rosneft’s Ryazan plant. In Taiwan, officials reported progress in negotiations to purchase LNG from the Alaska project, and President Trump claimed the talks could secure up to 30% of the plant’s output.

The White House is reviewing sanctions relief for vessels linked to Russia’s “shadow fleet” to facilitate oil shipments from Gulf states. In Italy, protests have blocked chemical and gas deliveries to ENI’s Taranto refinery, threatening a potential shutdown of its 84,000 barrel-per-day unit.

China’s leading solar manufacturers announced layoffs affecting over 40,000 workers as the country addresses solar overcapacity. Venezuela’s crude output edged up modestly in September, constrained by power outages and delayed upgrades. Syria reported two pipeline attacks that worsened diesel shortages, increasing reliance on imported fuels.

The U.S. administration is considering the Defense Production Act to fund capacity expansions at smaller refineries, starting with a $1 billion allocation for Delek’s Tyler plant. The International Energy Agency is also discussing the creation of emergency LPG reserves. Saudi Aramco and China’s Panjin Xincheng received the first Saudi crude cargo for the new 300,000 barrel-per-day Panjin refinery, slated for early-2027 start-up. Iran has reportedly exported limited LPG and jet fuel shipments despite a renewed U.S. naval blockade in the Gulf of Oman.