Brent crude above $105/barrel as Middle East supply disruptions keep oil markets volatile. Key levels to track

Brent crude remained above $105 a barrel on Tuesday as traders assessed the risk of prolonged supply disruptions across the Middle East. The benchmark briefly moved close to $110 before reversing sharply and then recovering, keeping oil prices highly volatile.

The Saudi East-West pipeline remains shut following attacks on energy infrastructure, raising concerns over how long the disruption could last and its impact on crude flows. The pipeline is particularly important because it provides Saudi Arabia with an alternative route for exports that bypasses the Strait of Hormuz.

The latest moves in crude also came against a backdrop of fresh developments involving Russian energy infrastructure, leaving the market to balance supply risks in the Middle East against the possibility of additional Russian oil and refined-product supplies.

Why Is Brent Crude Rising Today?

Anindya Banerjee, Head of Research – Currency, Commodities and Interest Rates from Kotak Neo said Brent briefly approached $110 before falling to around $105.68 after markets considered the possibility of a Russia-Ukraine energy truce.

Such a development could potentially allow damaged Russian refining capacity and diesel exports to recover, providing some relief to global energy markets. That optimism faded after reports of another Ukrainian drone attack on the Syzran refinery, bringing Russian supply risks back into focus.

Banerjee said the bigger concern is the possibility of disruptions continuing simultaneously across the Black Sea and Persian Gulf. With the Saudi East-West pipeline still offline, shipping through the Strait of Hormuz severely disrupted and attacks on tankers continuing, there are fewer alternative routes available to absorb further supply shocks.

The situation around the Red Sea is also adding to the pressure, with Houthi activity creating additional risks for shipping through the Bab el-Mandeb.

The physical market is already pointing to tighter crude availability. Iman Nasseri, senior vice president for Middle East and Asia at FGE, told NDTV Profit that physical crude barrels were trading at around $120-$130 a barrel, depending on the location.

Nasseri said a further loss of 2 million-4 million barrels per day of crude supply could put additional pressure on the market. If the physical barrels remain unavailable, Brent could eventually move towards $120-$150 a barrel.

He added that the market is currently assuming the Saudi pipeline disruption will be relatively short-lived. If the outage extends beyond two weeks, futures could increasingly converge towards physical crude prices.

Brent Crude Price Outlook

The duration of the Saudi pipeline outage is now one of the key factors for the oil market. Crude stored around Yanbu could provide some support for exports in the near term, but an extended shutdown would leave fewer options for moving Saudi barrels without relying on routes already facing disruption.

The broader conflict remains the biggest source of uncertainty. Any meaningful de-escalation could trigger a sharp reversal in crude, while further attacks on oil facilities, refineries or shipping routes could push prices higher.

Jonathan Barratt, chief investment officer at ETO Markets, said crude prices could reach $125-$130 a barrel if the conflict remains unresolved. He also warned that the risk premium in oil contracts could remain elevated until there is greater clarity on the conflict.

Higher oil prices are also increasingly feeding into the wider macroeconomic picture. An energy shock can raise inflation expectations and bond yields while simultaneously putting pressure on economic demand.

Banerjee said this transmission is now extending beyond crude, with higher energy costs influencing bonds, real yields, currencies and precious metals. For now, however, oil remains the key market to watch, with Brent's ability to stay above $100 dependent largely on whether supply disruptions ease or deepen.

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