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Crude oil prices have turned highly volatile in late October 2026, with Brent crude trading above USD 117 a barrel and moving towards the USD 120 mark. The rise is being driven by escalating tensions in West Asia, fears over supply and anticipation of the US Federal Reserve’s policy decision. Analysts describe the near-term outlook as bullish but extremely sensitive to headlines.
Prices climb across benchmarksBrent futures for December delivery rose USD 7.52, or nearly 7 per cent, over the week to settle at USD 117.38 a barrel on the Intercontinental Exchange. West Texas Intermediate (WTI) futures gained USD 4.25, or 4.3 per cent, to close at USD 103.27. On India’s Multi Commodity Exchange, November crude oil futures rose Rs 406, or 4.32 per cent, in a holiday-shortened week to end at Rs 9,800 a barrel.
Geopolitical risk premium
The main trigger is instability in West Asia. Rising US-Iran tensions, fears of renewed military action, Houthi attacks on Saudi infrastructure and threats to shipping lanes through the Strait of Hormuz have kept a sizeable risk premium in prices. Reports said the United States and Israel had prepared plans to target Iranian energy infrastructure, including facilities near Natanz, after the US mid-term elections on November 3. Iran has warned of repercussions if such attacks take place, adding to market anxiety.
Crude flows through Hormuz have partly recovered, but higher freight costs, restricted regional shipments and security threats still weigh on export reliability. Physical supply has not fully normalised, so risks remain tilted to the upside. Analysts say a major disruption to energy infrastructure or shipping could push prices to or beyond $120. Credible progress towards de-escalation, on the other hand, could bring sharp profit-taking and a quick correction.
Supply measures offer limited relief
Steps to ease supply have not reversed the rally. The International Energy Agency has said it is ready to release more strategic stocks. The G7 has backed an additional 100 million barrels, though this is largely an acceleration of existing plans. The first Russian diesel cargo bound for the United States has also arrived. Markets are looking for meaningful extra supply rather than announcements alone.
Fed meeting in focus
Investors are watching the Federal Open Market Committee meeting on October 27-28. The Fed’s guidance on inflation, especially with energy costs rising, will be closely read. A hawkish tone could strengthen the US dollar and weigh on demand-sensitive commodities such as oil, although continuing supply disruptions may limit any fall. Weekly inventory data from the American Petroleum Institute and the Energy Information Administration, along with stock levels at Cushing, will give further near-term cues.
What it means for India
Prolonged high crude prices carry macroeconomic risks for India. Costlier oil could pressure the rupee, add to inflation, widen the current account deficit and squeeze corporate margins. Ajit Mishra of Religare Broking and Navneet Damani of Motilal Oswal Financial Services advise caution. They suggest traders avoid chasing sharp rallies and instead track geopolitical developments, Fed signals and inventory data for confirmation of direction.
Crude therefore remains balanced between supply risks in West Asia and upcoming policy signals, leaving room for further volatility in the coming days.
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