Brent crude has risen above $100 per barrel as the escalating conflict between the United States and Iran threatens to disrupt oil supplies and shipping routes across the Middle East.
The international benchmark climbed to $102.50 per barrel, up $1.38 from Wednesday, according to recent data. US West Texas Intermediate also gained $1.51 to trade at $97.58 per barrel. The latest increase came after Iran attacked 10 ships near the Strait of Hormuz, following US attacks that sank five Iranian oil tankers. The attacks represent one of the biggest escalations involving commercial shipping since the six month old conflict began.
Brent had previously risen to $101.20 on Wednesday, marking the first time it traded above $100 since July 24. The latest move has pushed oil prices towards their strongest daily gains since September 1. Since the conflict between the US and Iran intensified on February 28, Brent crude has climbed sharply, reaching as high as $126.41 per barrel on April 30. Market analysts said the latest price increase reflects growing concerns about how long the conflict will continue and how much it could affect oil supplies from the region.
Ole Hansen, head of commodity strategy at Saxo Bank, said the move above $100 showed that traders were becoming increasingly concerned about the effect of the crisis on regional supply.
“The move towards and back above $100 Brent is reflecting a market that increasingly has to change its view on how long the Middle East crisis will continue to curb supply from the region.”
Hammad Hussain, senior climate and commodities economist at Capital Economics, said investors were also preparing for a longer conflict and the possibility of further attacks disrupting oil shipments.
“Market participants appear to be pricing in a more prolonged conflict in the Middle East as well as the risk that the latest escalation in military strikes disrupts oil flows from the Middle East.”
He added that a major concern was whether the attacks on oil tankers would reduce ship to ship transfers in the Gulf of Oman, which have helped maintain global oil supplies.
“The key risk is whether the recent attacks on oil tankers lead to fewer ship to ship transfers taking place in the Gulf of Oman, which have so far played a key role in providing oil to global markets and keeping a lid on prices.”
The Strait of Hormuz remains central to the situation because it carries a significant share of global crude shipments. Oil flows through the waterway have already fallen sharply following the renewed hostilities. Rystad Energy estimates that between 8 million and 9 million barrels of crude flowed through the Strait of Hormuz in the week before fighting between the US and Iran resumed on August 30. More recently, daily flows have dropped below 2 million barrels.
The attacks have also increased concerns about other shipping routes. Iran backed Houthi fighters in Yemen have attacked four cities in southern Saudi Arabia, including locations linked to the country’s oil infrastructure. The situation could further threaten crude shipments through the Red Sea, which has served as an alternative route for vessels avoiding the Strait of Hormuz.
With oil supplies increasingly exposed to military attacks and shipping disruptions, traders are watching developments in the Middle East closely. A prolonged crisis could keep crude prices elevated and increase pressure on countries and businesses that depend heavily on imported energy.
