Weekly Review: Brent Holds Above $105 as Hormuz Attacks Cut Gulf Flows 68%; WTI Jumps 5.81% on Record US Inventory Draw

Mumbai, 17 Oct: Global crude oil prices ended the week ended 16 October 2026 with modest gains for Brent but a sharp surge for West Texas Intermediate, as escalating attacks around the Strait of Hormuz and a larger-than-expected draw in US crude inventories reshaped the supply-risk calculus.

Brent crude futures for December delivery closed at $105.92 per barrel on Friday, down 0.13% on the day but up 0.44% for the week from the previous Friday’s settlement of $105.46. WTI crude for November delivery settled at $97.97 per barrel on Thursday, 15 October, surging $2.88 or 3.03% in a single session — its sixth consecutive daily gain and the highest close since 18 September. For the full week, WTI recorded a gain of 5.81%, massively outperforming Brent as lower shipping costs for US crude boosted demand for American barrels.

The divergence between the two benchmarks reflected the specific supply risks in the Middle East, where repeated attacks on commercial vessels in the Strait of Hormuz pushed tanker rates in the Persian Gulf to record highs, against the demand boost for US barrels from falling freight costs.

Hormuz Attacks Slash Gulf Crude Flows to 11.62 Million bpd, 68% of Pre-War Levels

The week’s dominant price driver was the escalating military confrontation around the Strait of Hormuz, through which roughly one-fifth of global oil and liquefied natural gas transport normally flows. The US Central Command confirmed that a Singapore-flagged container ship that sank in the Strait earlier in the week was hit by an Iranian projectile, adding uncertainty over the recovery of physical oil flows.

According to Kpler ship-tracking data, the seven-day average volume of oil transiting the Strait of Hormuz fell to 11.62 million barrels per day as of 13 October, equivalent to approximately 68% of the pre-war baseline of 17.15 million barrels per day. Iran said it was stepping up strikes in response to the US blockade of its ports and tougher sanctions introduced last month, while Houthi forces fired missiles at Yemen’s presidential palace complex in Aden on Thursday, killing two guards.

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The supply disruption prompted the International Energy Agency to agree on Thursday, 15 October, to release the remaining 100 million barrels of oil from a coordinated intervention launched in March, following lobbying efforts by US officials. The IEA also agreed to release more than 20 million barrels of diesel from emergency reserves to ease tight global fuel markets, with European diesel refining margins declining nearly 2% to $78.67 per barrel on Friday after the announcement.

US Crude Inventories Plunge 8.6 Million Barrels, Largest Draw Since February

The Energy Information Administration reported that US crude inventories fell by 8.6 million barrels in the week ended 9 October to 415.6 million barrels — the largest decline since February and far exceeding analyst expectations of a 288,000-barrel draw. The sharp drawdown was driven by hurricane-related production shut-ins in the Gulf of Mexico, which forced oil producers to shut in approximately 1.3 million barrels per day, or 62.9% of current Gulf production. The inventory data provided powerful support to WTI, which settled more than 3% higher on Thursday and extended its rally to a sixth consecutive session.

OPEC+ Holds November Quotas at September Levels; Saudi Arabia Maintains 10.478 Million bpd

The OPEC+ alliance, comprising Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, held a virtual meeting on 4 October 2026 and decided to maintain November production targets at September levels, reaffirming their collective commitment to market stability. The seven core members produced approximately 25 million barrels per day in August, about 5 million barrels per day below pre-conflict levels from late February. Exports from the Gulf region were running at only 60% to 80% of normal levels, according to Reuters estimates. The next OPEC+ meeting is scheduled for 1 November 2026.

MCX Crude Oil Surges ₹294 or 3.31% to ₹9,175 on Hormuz Supply Fears

On the Multi Commodity Exchange, crude oil futures for October delivery closed 1.61% higher at ₹9,175 per barrel on Thursday, 15 October, extending gains from the previous session. For the week, the October contract gained approximately ₹294 or 3.31% from the previous week’s close of ₹8,881 per barrel. The November contract also gained, reflecting the broad-based supply-risk premium embedded in domestic prices. MCX crude oil holding above ₹8,500, against pre-war levels near ₹6,500, highlighted the significant supply-risk premium still present in the market.

Indian Crude Basket Averages $120 per Barrel in October, Tracking Brent Above $105

The Indian Crude Basket, published by the Petroleum Planning and Analysis Cell, averaged approximately $120 per barrel in October 2026, significantly above the $82 average in July and $90 in August. The basket, which reflects the actual landed cost of crude for Indian refiners, rose to $122.0 per barrel on 7 October, up 1.01% from the previous assessment.

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A Jefferies report dated 16 October estimated that the cost of procuring crude for Indian oil marketing companies was comparable to an Indian crude basket price of $125 per barrel, leading to steep marketing losses. The report noted that freight costs have risen eightfold since the conflict began, with shipping now accounting for more than a quarter of the landed cost of crude oil, against just 3% before the war.

Petrol and Diesel Prices Frozen Across Major Cities for Third Consecutive Week

Retail petrol and diesel prices remained unchanged across major Indian cities for the third consecutive week. In New Delhi, petrol was priced at ₹102.12 per litre and diesel at ₹95.20 per litre on Friday, 16 October. Mumbai recorded petrol at ₹111.21 per litre and diesel at ₹97.83 per litre. Kolkata had petrol at ₹113.51 per litre and diesel at ₹99.82 per litre, while Chennai quoted petrol at ₹107.76 per litre and diesel at ₹99.55 per litre. Bengaluru’s petrol price stood at ₹111.68 per litre and diesel at ₹99.56 per litre. Hyderabad recorded petrol at ₹116.15 per litre, while Thiruvananthapuram had the highest diesel price among major cities at ₹104.40 per litre.

The government revised fuel export duties effective 16 October, raising the windfall tax on petrol exports fivefold to ₹2.50 per litre from ₹0.50, while cutting the levy on diesel shipments to ₹8.50 per litre from ₹16. The changes, announced in a government order issued late Thursday, apply only to fuel exports and do not affect domestic retail prices. The duty on aviation turbine fuel exports remained unchanged. The levies are reviewed every fortnight to reflect movements in global energy markets.

OMCs Lose ₹26 per Litre on Petrol and ₹30 on Diesel as Marketing Margins Deepen in Red

A Jefferies report dated 16 October estimated that Indian oil marketing companies are losing ₹26 on every litre of petrol and ₹30 on diesel as the Middle East conflict drives up crude procurement and shipping costs. The report noted that oil flows from the Middle East, excluding Iran, have fallen to approximately 75% of pre-war levels, compared with about 95% at the end of September, reversing the recovery in regional oil shipments seen towards the end of September.

While refining margins remain elevated, the benefit is being offset on the fuel marketing side by the higher cost of crude procurement. For Indian OMCs, the immediate challenge is therefore not just the price of crude oil but also the sharply higher cost of transporting it.

India’s Russian Crude Imports Fall 29% from July Peak as China Competes for Barrels

India remained the world’s largest destination for Russian crude oil in September, but imports fell sharply to 1.82 million barrels per day from 2.6 million barrels per day in June and 2.57 million barrels per day in July — a decline of roughly 29% from the July level. China’s imports of Russian crude rose to about 1.49 million barrels per day in September, tightening supply and pushing prices higher.

Venezuelan oil has returned to India’s crude basket, with flows accelerating since April. Reliance Industries’ Jamnagar complex is the main Indian buyer of Venezuelan heavy and extra-heavy grades, which require sophisticated refineries to process continuously. State-owned refiners have bought Venezuelan oil only opportunistically, in volumes far below Reliance’s.

IEA Releases 100 Million Barrels from Emergency Reserves; Diesel Margins Ease to $78.67

The International Energy Agency’s decision to release the remaining 100 million barrels from its March intervention, along with more than 20 million barrels of diesel, marked the week’s most significant supply-side policy response. The diesel release was front-loaded within 20 days, while crude deliveries are scheduled over four months.

European diesel refining margins declined nearly 2% to $78.67 per barrel on Friday following the announcement, though they remained well above historical norms after peaking at $95 per barrel in September. Analysts noted that the IEA release is unlikely to fully ease diesel supply tightness, with market participants viewing an easing of Middle East tensions as a more effective way to stabilise prices.

US Considers Easing Shadow Fleet Sanctions to Cut Record Freight Rates

The Trump administration is considering lifting sanctions on some so-called shadow fleet vessels that have carried oil and petroleum products from countries such as Russia, Iran and Venezuela, in a bid to cut record global freight rates. The discussions come days after President Donald Trump temporarily lifted sanctions on Russian diesel fuel, a move met with criticism from Ukrainian President Volodymyr Zelenskiy, European countries and some Trump’s fellow Republicans. The US Energy Department stated that easing sanctions would not help Russian crude or petroleum product transportation, but the market interpreted the move as a potential source of additional tanker availability and lower shipping costs.

Rupee Weakness Amplifies Import Costs; MCX Crude Premium Widens Versus International Benchmarks

The Indian rupee’s depreciation against the US dollar compounded the impact of elevated international crude prices on the domestic market. With Brent holding above $105 per barrel and the rupee trading near ₹94.96 per dollar, the landed cost of crude for Indian refiners remained significantly elevated.

The rupee’s weakness meant that MCX crude oil prices did not decline in line with international benchmarks, maintaining the supply-risk premium embedded in domestic futures. For India, which depends heavily on imported crude oil, persistently elevated prices could increase the import bill, put pressure on the rupee and complicate the inflation outlook.

The week demonstrated that crude oil markets remain hostage to Middle East supply disruptions, with the Strait of Hormuz crisis keeping Brent above $105 and WTI surging 5.81%. Indian petrol and diesel prices remained frozen despite international volatility, while OMCs absorbed mounting losses. Key factors to monitor include OPEC+ production decisions on 1 November, further IEA reserve releases, US shadow fleet sanction deliberations, and rupee-dollar movements.