Global oil prices are currently trading around $118 per barrel, and traders are preparing for a highly volatile $120-rates-in-November scenario as fears of renewed hostilities between the US and Iran grow despite attempts by Pakistan and Gulf parties to help mediate an end to the war.
Despite mediation efforts by Qatar and Pakistan, most signals point towards a resumption of US-Iran hostilities in the coming weeks.
What Is Pushing Oil Towards $120
The rally comes just days before the US midterm elections. Brent, the global benchmark, was trading above $116 per barrel only last week, when oil prices entered the danger zone.
Iran’s Islamic Revolutionary Guard Corps (IRGC) said three unidentified vessels struck naval mines in the Strait of Hormuz, caught fire, and were abandoned after taking an “unauthorised” route and ignoring Tehran’s warnings. The US Central Command (Centcom), like always, denies everything IRGC says.
How Governments and Producers Are Responding
EU governments will release 42 million barrels of strategic oil and fuel reserves over the next three months, half of it diesel. France, which is releasing 10 million barrels, expects pump prices to fall by €0.12 to €0.18 per litre within days.
Producers in the Gulf are also trying to work around the strait. Saudi Aramco has reportedly started offering discounted spot cargoes to European buyers for October and November arrivals, aiming to maximize loadings from its Red Sea coast.
Abu Dhabi’s ADNOC has told clients that its second 1.5 million barrels per day pipeline to Fujairah, which bypasses the Strait of Hormuz, will see first deliveries in early 2027.
What This Means for You
Pakistan now revises fuel prices daily, so movements in global oil prices reach the pump much faster than under the old fortnightly system. A volatile week in international markets could therefore mean frequent changes in what Pakistanis pay for petrol and diesel.
Petrol currently costs Rs. 377.91 per litre. At that rate, a motorist who uses 40 litres a month spends about Rs. 15,116 on fuel. Every Rs. 1 per litre increase adds Rs. 40 to that monthly bill, while a Rs. 10 increase would add Rs. 400.
The government has already stepped in once to hold prices steady. In the latest notification, it cut the petroleum levy on petrol from Rs. 80 to Rs. 65.29 per litre and made local refineries absorb a Rs. 14.71 per litre rise in import costs. Whether it can keep cushioning consumers if Brent crosses $120 remains to be seen.
Other Developments in Energy Markets
- Russia plans to extend its diesel export restrictions through January, while granting separate quotas for US-bound cargoes.
- Egypt bought six fuel oil cargoes for November-December delivery as soaring LNG prices strain its finances. It has already spent 60% of the $10.1 billion it budgeted for LNG imports in 2026/27.
- An armed group again shut a valve on Libya’s Hamada-Zawiya pipeline, halting flows to the country’s largest refinery, the 120,000 barrels per day Zawiya plant.
- Record freight costs from Europe pushed fuel oil price spreads in Asia to record highs.
- Japan is set to overtake China as the world’s largest LNG importer this year, with 62 million tons of imports compared to China’s expected 61 million tons.
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