Brent crude prices were trading close to $100 a barrel on Wednesday for the first time since July, as escalating attacks across the Middle East fuelled concerns over disruptions to oil supplies from the region.
Brent crude futures rose 1.3% to $99.22 a barrel by 0614 GMT, while U.S. West Texas Intermediate crude was up 1.2% at $94.13 a barrel.
Brent crude prices have jumped by a quarter since early August as hopes for a permanent resolution to the six-month-old war faded and as fighting flared again.
The Middle East war intensified on Tuesday with Iranian-backed Houthis in Yemen launching strikes on several Saudi cities, further embroiling a U.S. ally in the conflict.
In a sharp escalation of the six-month-old war, U.S. forces hit multiple Iranian oil tankers and Iran targeted a U.S. base in Jordan and attacked ships.
“Bullish momentum is building in crude markets as Brent crude approaches the psychologically important $100-per-barrel mark,” said Priyanka Sachdeva, head of market insights at Phillip Nova.
The latest attacks threaten to deepen disruptions to Middle East oil supplies, already strained by strikes on regional energy infrastructure and key shipping lanes.
While Saudi Arabia has diverted some exports away from the Strait of Hormuz, any sustained attacks on the kingdom could complicate efforts to keep crude flowing to global markets, analysts said.
“Iran’s attacks on Saudi energy facilities and the subsequent destruction of five Iranian tankers raised concerns about another prolonged disruption to oil supplies,” OCBC analysts said in a note.
Analysts also said that higher oil prices have stoked inflation fears, especially in Asia, as many economies are heavily dependent on imported energy.
“$100 Brent should not be viewed simply as a psychological milestone. It is a warning level for the broader economy,” Sachdeva said.
REUTERS
