Brent crude, the global oil price benchmark, hit $110.70 a barrel on Monday, its highest level since May 20. Fresh attacks on Gulf shipping drove the move, and households are paying for it.

Yet the barrels are returning. Gulf oil flows have recovered to about 80% of prewar levels, according to US Energy Secretary Chris Wright.

Why Is the Oil Price Rising if More Barrels Are Flowing?

Six forces are keeping crude near its highest level since May.

  • Attacks on Saudi Arabia. A confirmed Oct. 14 strike hit Aramco’s headquarters, and the Houthis claim more.
  • Russian refinery damage. A Ukrainian strike knocked out a crude unit at the Ryazan refinery.
  • Thin inventories. Onshore stocks sit at their lowest since at least 2016, according to the International Energy Agency (IEA).
  • Diesel crunch. Diesel topped $200 a barrel in September, nearly double the price of crude.
  • OPEC+ on hold. The producer group kept its November output targets unchanged.

Infographic of six reasons the oil price is rising / Source: BeInCrypto

Dutch bank ING says traders are paying up for that risk:

“Oil prices remain well-supported … This suggests the market is pricing in a significant risk premium, given the situation’s volatility.”

Who Pays for $110 Oil, and Who Gets Paid?

Drivers feel it first. US regular gasoline averages $4.33 a gallon, over $1 above a year earlier, AAA data shows.

That cost then spreads into overall prices. US consumer inflation reached 3.7% in September, the Bureau of Labor Statistics (BLS) said.

Energy alone rose 20.4% year over year. As a result, traders now expect another rate hike in December.

Energy investors sit on the other side of that bill. The S&P 500 energy sector gained 51% this year through Oct. 14, Opening Bell Daily data shows.

The broad index rose about 13% over the same period.

Can Brent Hold Above $100 if the War Premium Fades?

Technically, Brent has respected a rising trendline since early July and printed a fresh higher high.

It also cleared the 0.786 Fibonacci level at $108.94. The Relative Strength Index (RSI), a momentum gauge, reads 66, below overbought.

In a correction, the 0.618 Fibonacci level near $100.64 and the trendline form first support.

UKOIL daily chart / Source: Tradingview

However, Goldman Sachs estimates about $25 of Brent’s price is war premium and forecasts $90 by December.

June Goh, senior oil market analyst at Sparta Commodities, seesBrent rangebound around $100:

“The markets seem unwilling to absorb the higher prices with the rest of the economy not looking rosy.”

With US midterms next month, pump prices have become a political test as much as an economic one.