Amid escalating Middle East tensions and the approach of Hurricane Milton, Brent crude oil surged above $80 per barrel for the first time in a month, while WTI crude rose over 4% at one point.

Last week, international crude oil prices rose more than 9% cumulatively: WTI posted its largest weekly gain since the week ending March 31, 2023, and Brent its largest since October 7, 2022. The primary driver was Iran’s retaliatory missile strikes against Israel following an attack on Hezbollah in Lebanon—signaling an expansion of the Middle East conflict. As Iran—the third-largest oil producer within OPEC—faces potential disruptions to its oil output, global supply risks have intensified. If Iran’s oil infrastructure becomes a target of Israeli strikes, global oil supply could shrink by as much as 4%. Iranian oil production is already operating near full capacity; escalating tensions could render output even more fragile. Moreover, should hostilities extend to the Strait of Hormuz—a critical waterway supplying roughly one-fifth of global oil demand—impacts would be far greater. Saudi Arabia, Iraq, the UAE, Kuwait, and Qatar all rely on this strategic chokepoint to export oil. On Friday last week, U.S. President Joe Biden stated he was unaware of when Israel would respond to Iran’s missile attacks launched the previous Tuesday, and instead urged Israel to consider alternative options—hinting at U.S. efforts to dissuade Israel from targeting Iranian oil facilities. On the day of his remarks, crude oil—having risen over 2% intraday—gave back most of those gains. Nevertheless, developments over the weekend and into Monday indicated continued tension in the region. According to CCTV News, the Israeli Defense Forces (IDF) issued a statement on the evening of October 6 local time reporting the detection of approximately five projectiles entering Israeli territory from Lebanon. Israeli media reported that the IDF’s air defense systems failed to intercept rockets fired from Lebanon, resulting in several injuries. On the morning of October 7, the IDF announced that air raid sirens had sounded in several areas near Gaza, after which four rockets were detected launching from southern Gaza toward Israel. Three were intercepted by air defense systems; the fourth struck an open area. Hamas claimed responsibility for the rocket attack. Rebecca Babin, Senior Energy Trader at CIBC Private Wealth Group, commented: “Anxiety is mounting. I think the longer we wait, the stronger the fear grows—like being at the top of a roller coaster, anticipating the plunge.” Another catalyst for Monday’s oil price surge was Hurricane Milton. Locally on Monday, Milton rapidly intensified into a Category 5 hurricane over the eastern Gulf of Mexico and began moving toward Florida, threatening potential disruptions to Gulf oil supplies.

Multiple ports have imposed navigation restrictions and closed terminals!

Tampa, St. Petersburg, Fort Myers, SeaPort Manatee, Panama City, St. Joe, Key West, Port Canaveral, Jacksonville, Fernandina The U.S. Coast Guard stated in a Sunday announcement that large oceangoing vessels—including tugboats and barges—that are already near or have arrived at ports should continue preparations and safely depart before closures take effect. The Coast Guard noted that other ports handling petroleum and fuel imports and exports in Florida, Mississippi, and Alabama—including Pensacola, Pascagoula, and Mobile—remained open as of Monday. According to data from the Office of the U.S. Trade Representative, Florida ranked as the sixth-largest U.S. exporter of goods last year. Meteorologists forecast storm surges of 10 to 15 feet (3.05 to 4.57 meters) along the Florida Gulf Coast where Milton is expected to make landfall, with wind speeds of 120–140 mph and rainfall exceeding two feet—potentially near Tampa. On October 7 local time, U.S. President Joe Biden issued a declaration of emergency for Florida and ordered federal assistance. According to Reuters, Florida has ordered large-scale evacuations to prepare for potentially catastrophic winds and torrential rain. The U.S. National Hurricane Center stated on Monday that the storm is expected to approach the western coast of Florida’s peninsula on Wednesday as a Category 5 hurricane on the Saffir–Simpson scale.

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