Markets are braced for a continuous ascension of oil prices after Hamas launched a deadly terrorist attack on Israel, sparking fears of a “spiraling” crisis across the Middle East. Brent futures soared 4% to $86.50 a barrel when trading began in New York on Sunday night, amid fears about future supply. Brent crude is currently priced at about $88/bbl, having jumped more than 3% since the attacks on Israel. In September, the U.S. Energy Information Administration offered its short-term energy outlook, writing that with Saudi Arabia’s extended production cut through year’s end, its forecast “averages $93 dollars per barrel” in the fourth quarter, with price declines beginning next year as inventories build.

The surge in oil prices reversed last week's downtrend – the largest weekly decline since March – in which Brent fell about 11% and WTI retreated more than 8% being impacted by concerns about high interest rates and their impact on frequency and extensibility of global traveling.

Last week, OPEC+ decided to keep current oil production cuts in effect until the end of the year. According to CNBC quoting the Saudi energy minister Prince Abdulaziz bin Salman saying on the sidelines of the MENA Climate Week in Riyadh on Sunday, that the influential Saudi and Russia-led oil producers' alliance is preventively prepared to wait months for guidance from “real numbers” before adjusting policies amid price volatility in the crude market.

Another contributing factor is that on October 3, the American Petroleum Institute (API) reported a large draw of 4.21 million barrels in U.S. crude inventories, compared to the preceding week’s 1.586-million-barrel build. Analysts were expecting a modest inventory draw of 92,000 barrels for the week. The total number of barrels of crude oil moves so far this year is 9 million, according to API data.

Meanwhile, under the Biden Administration, the U.S. Strategic Petroleum Reserves, SPRs, has declined to only a 17-day supply level. No plans to replenish it have been announced yet.

But according to Bloomberg's Julian Lee, demand destruction is “already underway”. In the United States, gasoline consumption this driving season was 600,000 bpd below the average for 2019, the last pre-pandemic year with what is assumed to be normal demand. So oil price guidance is not a straightforward equation.