Key Highlights

● Brent crude rose $4.35 to settle at $113.17 a barrel.

● It was Brent's highest level since May 4, after starting October below $97.

● West Texas Intermediate climbed to a five-month high near $100 a barrel.

● Treasuries rallied and the 10-year yield fell below a key threshold.

Brent crude, the global oil benchmark, rose $4.35 on Thursday, October 22, to settle at $113.17 a barrel, its highest level since May 4. The jump capped a sharp October climb: Brent was below $97 at the start of the month.

The drivers were geopolitical, with fresh violence in Saudi Arabia and a report about possible military action against Iran pushing traders to price in more supply risk.

Attacks in Saudi Arabia

Houthi attacks in Saudi Arabia hit Dammam airport and an Aramco oil field, according to reports. One report said four people were killed. Saudi Arabia is one of the world's largest oil exporters, and any threat to its production or export infrastructure tends to ripple quickly through prices.

The US State Department also ordered non-emergency staff to leave Saudi Arabia, a step that signaled Washington's concern about the security situation.

Iran strike plans

Adding to the tension, a media report said the US and Israeli militaries have plans to renew strikes on Iran after the November 3 midterm elections. Brent has climbed by more than half since the Iran war began in late February.

There is a partial offset. A report said Middle East oil exports now exceed pre-war levels via routes that bypass the Strait of Hormuz. Separately, US crude inventories fell by more than 3 million barrels in the latest weekly government data.

US benchmark West Texas Intermediate also climbed to a five-month high and came close to $100 a barrel during the session before settling just below it, though reports differed slightly on the exact settlement price.

The ripple effects

Higher oil is already biting into corporate outlooks. Southwest Airlines (NYSE:LUV) cut its 2026 earnings forecast because of fuel costs, and United Airlines (NASDAQ:UAL) cut the high end of its guidance, citing energy costs. Procter & Gamble (NYSE:PG) executives warned that "Oil at $113 means more is coming in Q3 and Q4."

Railroads, by contrast, are benefiting in one way. CSX (NASDAQ:CSX) benefited as record diesel prices in September shifted freight from trucks to rail. Valero (NYSE:VLO) reported a record quarterly profit, though its shares fell. Chevron (NYSE:CVX) ended essentially flat.

Oil's climb also weighed on risk appetite elsewhere. Bitcoin's slide toward $81,000 was tied partly to oil above $111.

Bonds look the other way

Strikingly, bond markets did not react as if inflation were about to surge. Treasuries rallied, and the 10-year yield closed back below a closely watched threshold for the first time since September 22. "If oil is about to spark an inflation wave, the bond market hasn't heard about it," one commentator said.

The bond rally was driven by a selloff in technology stocks. The Nasdaq Composite fell 694 points to 26,008.86, and the S&P 500 dropped 93.74 points to 7,663.43, its worst day since July.

Next Tests for $100-Plus Oil

Traders will watch for any further attacks in Saudi Arabia and any official response to the reported Iran strike plans, with the November 3 midterms a key date. Friday's S&P Global PMIs will show whether rising energy costs are feeding into business prices. The Federal Reserve announces its decision on October 28, and September PCE inflation arrives on October 29. Airline, chemical and consumer-goods companies reporting next week will offer more detail on how $100-plus oil is hitting costs.