Oil prices rallied sharply on Friday, October 16, 2026, as the conflict in the Middle East continued to escalate, according to a market report from Sprague Energy. The November WTI contract settled up $3.44 at $101.41 per barrel and traded as high as $101.82 in the post-settlement period, while the December Brent contract settled up $3.94 at $109.86. The crude market had traded sideways in overnight trading, posting a low of $96.85, before bouncing off that level and extending its gains by almost $3.30 to a high of $101.58 ahead of the close.
The rally was driven by rumors of attacks on Saudi energy infrastructure and by the escalating conflict between Saudi Arabia and Yemen's Houthis. Strikes on vessels around the Strait of Hormuz had increased over the past few days, as Iran said it was stepping up its strikes in response to the U.S. blockade of its ports and to sanctions introduced last month. Product markets also firmed, with heating oil settling up 5.35 cents at $4.8991 and RBOB settling up 5.52 cents at $3.2354.
In early trading on Monday, as of 8:45 AM EDT, the November WTI contract was quoted at $101.00, down 41 cents, the November RBOB at $3.2136, down 2.18 cents, and the November heating oil at $4.8735, down 2.56 cents, according to Sprague Energy. Sprague noted that the crude market would be driven by the latest headlines reported over the weekend and that it would remain supported by continuing uncertainty over supply amid Middle East geopolitical risks. The market would also watch for further developments on reports suggesting that Iran may be preparing a pre-emptive strike following unusual military movements detected by Western intelligence.
Sprague identified resistance at $101.82, $103.48, $105.63, $106.75 and $109.24, and support at $96.85, $93.58, $91.70 and $89.61. Barclays maintained its forecasts of $100 per barrel for Brent crude in 2026 and $85 per barrel in 2027. The bank said near-term oil price risks remain skewed higher, arguing that renewed attacks on vessels and the Saudi-Houthi escalation are stalling the Middle East supply recovery.
It also said that exceptionally low inventories, light speculative positioning and steep backwardation leave the market vulnerable to further upside, and that the recent increase in freight costs could persist for at least a few more weeks. On the policy front, the U.S. Department of Energy said it has issued a request for proposal for an exchange of up to 17 million barrels of crude oil from the Strategic Petroleum Reserve.
The exchange would be part of a global deal the United States struck in March, under which Washington agreed to loan 172 million barrels of oil from the SPR as part of a wider arrangement with about 30 countries in the International Energy Agency to release 400 million barrels from reserves worldwide. According to a Reuters survey, crude output from the 11-member Organization of the Petroleum Exporting Countries rose in September by 1.78 million bpd month-on-month to 21.49 million bpd, despite continued constraints on exports linked to the war in Iran and the U.S. blockade of Iranian shipments. The increase was led by Saudi Arabia, whose output rose by 1.2 million bpd to 8.2 million bpd, and Iraq, whose output rose by 900,000 bpd to 4.1 million bpd.
U.S. drilling activity was mixed. Baker Hughes reported that the total rig count was unchanged in the week ending October 16, with oil rigs down by three to 459, gas rigs up by one to 133, and miscellaneous rigs up by two to 11, the highest level since January. On the refining side, IIR Energy said U.S. refiners were expected to shut in about 529,000 bpd of capacity for the week ending October 16, which would increase available refining capacity by 50,000 bpd.
Offline capacity is expected to fall to 433,000 bpd in the week ending October 23 and to 213,000 bpd in the following week. Sources: Sprague Energy market update dated October 19, 2026 (spragueenergy.com); Reuters survey on OPEC output; Barclays; U.S. Department of Energy; Baker Hughes; IIR Energy.
Source: spragueenergy.com