By: OrePulse

Brent crude climbed above $110 a barrel on October 19, reaching its highest level in five months, after a wave of attacks on oil tankers sharply reduced crude shipments out of the Gulf.

The global benchmark traded at $109.68 a barrel after briefly breaching $110 earlier in the session. The U.S. benchmark, West Texas Intermediate, which had also pushed past $100 earlier in the day, stood at $98.55. Brent and West Texas Intermediate are the two reference prices most widely used to set the cost of crude oil sold around the world.

The rally followed a sharp rise in attacks on tankers transiting the region over recent weeks. Shipping-data provider Kpler recorded at least 18 attacks on tankers over the preceding two weeks, according to Reuters reporting on Kpler's figures.

Those attacks have cut deeply into the volume of crude leaving the Gulf. Daily oil flows out of the region fell to about 8.5 million barrels, down from more than 20 million barrels two weeks earlier, according to the Kpler data cited in the Reuters reporting.

Commodities analysts Warren Patterson and Ewa Manthey of ING said crude prices had stayed well supported even in stretches when outflows from the Gulf held up comparatively well. "Oil prices remain well-supported amid ongoing tensions in the Middle East despite relatively strong Persian Gulf flows," they said.

The analysts said the latest price gains showed the market was building in a sizeable cushion against the risk of further disruption. "This suggests the market is pricing in a significant risk premium, given the situation's volatility," they said. They added that such a premium would typically recede once flows through the region proved stable and strong over a longer stretch. "Clearly, there are no signs of this yet," they said.

The Gulf carries a large share of the world's seaborne crude exports, and tankers moving through the region have come under repeated attack this year. The latest surge in attacks, and the accompanying drop in outflows tracked by Kpler, drove Brent's latest climb.

The ING analysts said the elevated pricing was likely to persist unless outflows from the Gulf stabilized and strengthened on a sustained basis, a condition they said had not yet been met.