Brent crude settled at $116.72 Friday, its highest close since June 2022, after Brent futures gained 3.1% to close at $116.72 a barrel. U.S. West Texas Intermediate added 3.8% to settle at $103.27 a barrel. That is three consecutive weeks of gains, and the proximate cause is not hard to find: Iran’s army chief said the country’s military is fully prepared for “asymmetric warfare” after strengthening its capabilities. The New York Times reported this week that the U.S. and Israel have developed plans for renewed strikes against the Islamic Republic after the American midterm elections on November 3.
The price move is real. What precious metals and commodity investors need to assess right now is whether the investment opportunity is equally real, or whether most of it has already been collected.
What’s Driving the Market
Brent is sharply higher in 2026 as the U.S.-Iran war drags on into its ninth month. The Houthi dimension has accelerated in recent days: Iran-backed Houthi militants claimed recent attacks on the Saudi Red Sea port of Yanbu, as well as deadly strikes on an oil field and airport in the kingdom. The U.S. State Department has ordered non-essential personnel to leave Saudi Arabia due to the strikes, according to the Associated Press.
Supply arithmetic has shifted structurally. While vessels have been moving through the Strait of Hormuz, shipping in the Middle East has become increasingly expensive due to war-related risks. Refined products have felt it most directly: the 3-2-1 crack spread, which assumes three barrels of crude yield two of gasoline and one of diesel, stands at roughly the mid-$50s a barrel based on recent front-month futures pricing. A year ago it was near $23.
The Investment Opportunity
Energy has been the trade of 2026. XLE has surged to its highest level on record this week, closing at $69.33 on October 23. Integrated majors have kept pace: XOM has returned about 51% year to date, while CVX has returned about 53%.
Refiners have done even better. Marathon Petroleum is up about 181% year to date, and Valero Energy is up roughly 160% year to date, against about 12% for the S&P 500. Valero kicked off refiner earnings season this week with one number that sums up the group’s boom: its refining margin rose to $39.24 per barrel from $13.14 a year earlier. Those are extraordinary numbers. They are also the reason to pause.
One fund manager that held both MPC and VLO chose to exit both positions as demand destruction appeared to be accelerating, noting that the refiners were pricing in roughly two consecutive years of crack spreads staying at currently elevated levels, which he called a bold prediction in a volatile world. That valuation argument matters. GuruFocus has recently flagged XLE as trading above its GF Value estimate, suggesting caution for income-focused investors.
The more selective case sits with the integrated majors. Both XOM and CVX report earnings next week. XOM stock has returned roughly 52% over the past year, compared with about 17% for the S&P 500. Morgan Stanley on October 15 maintained its Overweight rating on CVX and raised its price target from $218 to $226. Unlike pure refiners, integrated majors capture upstream production gains even if crack spreads compress.
Risks to Monitor
The bullish scenario requires escalation to continue without demand collapsing. Over the past month, Brent’s price has risen about 10%. Moves of that magnitude compress the margin of safety. If U.S.-Iran talks resume, or if post-midterm strikes fail to materialize, crude could give back a significant share of Friday’s session quickly. The bigger point is that energy’s market sensitivity can change fast: when geopolitical risk recedes, crude-linked equities often snap back toward behaving like cyclical stocks, not hedges.
The midterm election date is not just a political milestone — it is a policy floor for crude. Trump’s own public comments have effectively telegraphed that no supply-side relief arrives before November 3.
On the supply side, refined-product prices have risen even faster than crude, most notably diesel, which leaves refiners exposed to a sharper reversal if any relief valve opens, whether through policy intervention or OPEC+ additions.
Bottom Line
Brent at $116 is not new information for anyone who has been watching energy since February. The asymmetry that made XOM, CVX, VLO, and MPC obvious buys earlier this year no longer exists at current prices. Integrated majors going into earnings next week still offer a cleaner risk profile than refiners priced for record crack spreads to persist indefinitely. For precious metals investors watching commodity markets broadly, the more important read from Friday’s session is that geopolitical risk premiums are being priced aggressively across all hard assets. Gold’s correlation to crude during active Middle East conflicts has historically been additive rather than substitutional. The energy trade and the gold trade are not competing right now. They are telling the same story about the same risk.