The desk views Brent near $117 as carrying a large geopolitical risk premium tied to Iran, Hormuz and Saudi supply, which adds upside pressure to inflation and to Fed policy.

Data as of the close on Friday, Oct. 23, 2026, unless noted.

Price. Brent settled at $116.72 on Oct. 23, the highest since April 29, up about 6% on the week and a third weekly gain. WTI settled at $103.27. Impact: the gap of more than $13 points to risk priced into seaborne crude that passes Gulf chokepoints.

Risk premium. ING has said its forecast of an $80 Q4 Brent average now looks unattainable. Impact: a large share of the price reflects supply-disruption risk (the "risk premium") rather than current supply and demand.

Hormuz. October is the worst month for attacks on commercial shipping in and around the Strait of Hormuz in a think tank's data back to 2017, though flows have picked up. Impact: sustains the premium even with barrels moving.

Saudi and Iran. Houthi strikes on Saudi Arabia include a drone attack aimed at the Shaybah field (CNBC). Tehran has threatened Gulf oil facilities if a new US-Israeli offensive starts (Guardian). Impact: raises the risk of physical supply loss.

US response (public record only). President Trump said on Oct. 21 that the US was not negotiating with Iran, and US officials told The New York Times that plans exist for fresh strikes after the midterm elections (CNBC). Impact: escalation risk stays priced.

Inflation and the Fed. Oil passes into gasoline and transport costs, then broader prices. With inflation above target and a December hike largely expected, sustained $110+ Brent raises the risk that inflation expectations rise. Impact: a less patient Fed and long-term Treasury yields held near 5%.

What would change the view.

• Credible diplomacy, a halt in tanker attacks, or lower Hormuz insurance costs: premium shrinks.
• Large, repeated strategic reserve releases: premium shrinks.
• Renewed strikes, damage to Saudi export capacity, or closure of the strait: premium rises.
• Steepening backwardation (near-term prices well above later ones): physical tightness, not headline risk.