Key Highlights

● Brent crude rose $4.35 to $113.17 a barrel, its highest since May 4.

● West Texas Intermediate approached $100 before settling just below that mark.

● The State Department ordered non-emergency staff to leave Saudi Arabia.

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

Oil prices climbed on Thursday, October 22, after Houthi attacks in Saudi Arabia struck Dammam airport and an Aramco oil field. Brent crude rose $4.35 to $113.17 a barrel, its highest since May 4, while US benchmark West Texas Intermediate approached $100 during the session before settling just below that mark.

One report said four people were killed in the attacks.

Why the attacks matter

Saudi Arabia is one of the largest oil producers in the world, and Aramco, its state oil company, runs much of the infrastructure that moves crude to global markets. Dammam sits in the kingdom's Eastern Province, the heartland of its oil industry. An attack on an Aramco field raises the prospect of disrupted output, and even the threat of further strikes can add a risk premium to prices.

The US State Department ordered non-emergency staff to leave Saudi Arabia, a sign of how seriously Washington is treating the security situation.

The attacks came on top of a broader regional conflict. Brent has climbed by more than half since the Iran war began in late February. A media report also said on Thursday that the US and Israeli militaries have plans to renew strikes on Iran after the November 3 midterm elections.

Some supply relief

Not every signal pointed to tighter supply. A report said Middle East oil exports now exceed pre-war levels by using routes that bypass the Strait of Hormuz. US crude stocks also fell by more than 3 million barrels in the latest weekly government data, reflecting solid demand.

Still, Brent was below $97 at the start of October, so this month's rally has been steep.

Winners and losers

Energy costs are now a central theme in earnings. Southwest Airlines (NYSE:LUV) cut its 2026 earnings forecast, citing fuel, and United Airlines (NASDAQ:UAL) trimmed the high end of its guidance because of energy costs. Procter & Gamble (NYSE:PG) executives said "Oil at $113 means more is coming in Q3 and Q4."

Some companies are benefiting. Union Pacific (NYSE:UNP) and CSX (NASDAQ:CSX) rose after earnings, with record diesel prices in September shifting freight from trucks to rail. Valero (NYSE:VLO) posted a record quarterly profit, though its shares fell. Chevron (NYSE:CVX) was essentially unchanged.

The broader stock market was focused elsewhere. 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, as artificial-intelligence and chip stocks sold off. Asian markets also fell overnight, and Europe had its biggest drop in three weeks.

Bonds and inflation

Rising oil would normally lift inflation fears and bond yields. But Treasuries rallied on Thursday, with the 10-year yield closing 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.

Gulf Risks Ahead for Crude

Traders will monitor any further attacks in Saudi Arabia and the security response from Riyadh and Washington. The reported Iran strike plans keep the November 3 midterms in focus for energy markets. Friday's S&P Global PMIs will show whether higher fuel costs are lifting prices paid by businesses, and the Federal Reserve announces its decision on October 28. September PCE inflation, due October 29, will show how much energy has already fed into consumer prices.