The G7's emergency oil release this week will take a little pressure off diesel prices this autumn. But it does nothing about Hormuz, where tankers continue to be hit. Saudi conflict with the Houthis is also ramping up, with Saudi airports and refineries now being targeted. We expect the US to return to the negotiating table sometime after the midterm elections.

We've been making similar predictions since July, in the Diplomatic Insight weekly brief, published analysis and geopolitical reports for clients. Too often in this business predictions are made and then forgotten. From this month, we're tracking all of our attempts at foresight. The results are below. It's early days, but we're doing pretty well, and will continue to track and report our accuracy.

Resource Security·Global

G7 agrees emergency release of 100 million barrels to ease the diesel shortage

G7 governments agreed on 2 October to release up to 100 million barrels of crude and diesel from emergency stocks over four months, coordinated by the International Energy Agency (IEA). Members also pledged not to restrict energy exports to each other, and Donald Trump dropped his threatened ban on US diesel exports. Brent crude remains around $100 a barrel. Our view is that this is a drop in the ocean against the closure of Hormuz, but is diplomatically significant. The pledge removes the risk of Europe losing US diesel this winter, and Trump will hope it eases diesel prices slightly ahead of the midterms. Any minor relief is likely to fade when the release ends in early 2027, unless shipping through Hormuz and the Red Sea recovers.

Source: Brent Crude: FRED and OilPriceAPI; Diesel: EIA

Conflict & Instability·Middle East & North Africa

Yemen's government launches offensive as the Houthis fire missiles at Riyadh

Yemen's internationally recognised government announced on 4 October that it aims to retake all Houthi-held territory. Backed by Saudi air strikes, its forces say they have recaptured the Red Sea port of Mocha and positions near the Bab al-Mandeb strait. The Houthis have hit back with missiles and drones aimed at Saudi airports, including Riyadh's main airport, and an Aramco refinery at Rabigh. Our view is that the Houthis pushed their luck a bit too far and have sparked a major internationally backed reprisal, not simply air strikes. Retaking the coast would make shipping through the Bab al-Mandeb safer and may secure Saudi Arabia's Hormuz workaround, but the conflict risks will increase and will not reduce quickly. The Houthis are likely to step up strikes on Saudi targets as they lose ground.

Politics & Governance·Americas

Flávio Bolsonaro leads Lula into Brazil's presidential runoff

Senator Flávio Bolsonaro, son of the former president, won 47% of valid votes in Brazil's first round on 4 October. President Luiz Inácio Lula da Silva took 45%. The two meet in a runoff on 25 October. Bolsonaro's Liberal Party also became the largest party in both houses of Congress, winning 121 of 513 lower house seats and growing from 9 to 28 senators. Our view is that Bolsonaro is now the favourite, and that Congress has moved right whoever wins. Lula needs around six in ten votes from those who backed smaller candidates, which is a hard target. A Bolsonaro win would bring Brazil closer to Washington, including joining the Shield of the Americas security grouping.

Also this week

Ethiopia retakes Tigray's capital and cuts ties with Eritrea. Pro-government forces entered Mekelle on 4 October, days after Ethiopia cut diplomatic ties with Eritrea. Ethiopia accuses Eritrea, Sudan and Egypt of backing the rebels. Conflict & Instability · Sub-Saharan Africa

Six tankers struck in Hormuz in a week. Six tankers were struck in the Strait of Hormuz in the week to 2 October, according to UK Maritime Trade Operations. Washington is sending a third aircraft carrier and over 9,000 more troops. Defence & Security · Middle East & North Africa

Russian drones strike merchant ships in the Black Sea off Bulgaria. Drones struck three merchant ships on 6 October, sinking one off Bulgaria's coast, and President Zelensky said Bulgaria had confirmed Russia was responsible. Attacks this close to EU waters are likely to push up insurance costs for all Black Sea trade. Trade & Supply Chains · Europe & Eurasia

US targets Russia's main sanctions-busting payment network. The US Treasury on 1 October designated the A7 network as a transnational criminal organisation. A7, linked to Russia's state-owned Promsvyazbank, also handled Iranian oil and arms payments. Sanctions & Export Controls · Europe & Eurasia

US proposes Russia-Ukraine talks as Moscow vows more strikes on Kyiv. President Zelensky said on 4 October that the US has proposed three-way technical talks with Russia by the end of October. Russia has promised continued strikes on Kyiv, so any talks are more likely to cover energy infrastructure and Black Sea shipping than a full ceasefire. Politics & Governance · Europe & Eurasia

Spain's Sánchez calls a snap election for 29 November. Prime Minister Pedro Sánchez dissolved parliament on 5 October after Congress rejected two government housing decrees. Another fragmented result could leave Spain without a stable government or budget well into 2027. Politics & Governance · Europe & Eurasia

Pakistan strikes militants inside Afghanistan again. Pakistan carried out air strikes on two locations in Afghanistan on 1 October, targeting the Pakistani Taliban and Baloch militant groups. It follows strikes on 21 September. Afghan retaliation along the border is likely. Conflict & Instability · South Asia

South Korea's exports hit a record on AI chip demand. South Korean exports rose by over 80% year on year to a record $121bn in September, with chips almost half the total. SK Hynix and Samsung dominate the memory used in AI servers. Trade & Supply Chains · Asia-Pacific