Global crude oil prices strengthened again during the Asian trading session on Friday (October 23, 2026), with Brent crude reaching the US$114 per barrel mark. This gain follows a sharp surge in the previous session, during which Brent rose by approximately 4%, hitting its highest closing level in five months. The price increase reflects investor concerns regarding potential disruptions to global energy supplies, driven by escalating geopolitical tensions in the Middle East.
The intensifying conflict between Saudi Arabia and the Houthi group in Yemen is a primary catalyst for the rise in oil prices. Attacks on strategic facilities and energy infrastructure in Saudi Arabia have heightened fears regarding the continuity of crude oil production and distribution. The deteriorating security situation even prompted the Saudi oil company, Saudi Aramco, to evacuate employees from its headquarters in Dhahran. Consequently, market participants are once again factoring a geopolitical risk premium into global oil prices.
Pressure on energy supplies is further compounded by threats to oil shipments passing through the Strait of Hormuz and the Bab el-Mandeb—two strategic maritime chokepoints vital to international energy trade. Any disruption to these distribution routes could drive up shipping costs and tighten global oil supplies. Furthermore, a decline in Libyan oil production, caused by pipeline disruptions, has added to market unease. This combination of risks has provided continued support for Brent prices, even as the market faces the potential for profit-taking following the recent sharp rally.
The rise in oil prices toward the US$114 per barrel level has also fueled concerns regarding global inflationary pressure, particularly ahead of the Federal Reserve meeting scheduled for October 27–28, 2026. High energy costs threaten to increase production and transportation expenses, potentially slowing the decline of inflation. This situation could influence market expectations regarding the direction of U.S. interest rate policy. Looking ahead, investors will continue to closely monitor developments in the Middle East conflict, the security of oil supply routes, and the responses of central banks to the renewed risk of energy-driven inflation.
Impact on the U.S. Dollar
Outlook: The USD is likely to strengthen, though with two-way risks.
A rise in Brent crude prices toward US$114 could exacerbate concerns regarding U.S. inflation. If the market anticipates that the Federal Reserve will need to keep interest rates higher for longer, U.S. bond yields could climb, providing support for the dollar.
Furthermore, the conflict in the Middle East may boost demand for the dollar as a "safe-haven" asset. Conversely, if high energy prices trigger fears of a slowdown in the U.S. economy, the dollar’s appreciation could be tempered.
As long as Brent prices remain elevated and the risk of supply disruptions persists, the U.S. dollar is likely to find support from expectations of a tighter interest rate environment and heightened global uncertainty. (CP)