Brent crude rises above $100 a barrel as escalating attacks in West Asia raise fears of prolonged disruptions to oil supplies and key shipping routes
Brent crude oil prices rose above $100 a barrel on Wednesday for the first time since July 24, as the intensifying West Asia conflict fuelled concerns over further disruptions to oil supplies and shipping routes.
Brent crude futures rose $2.15, or 2.2 per cent, to $100.07 a barrel by 0721 GMT. US West Texas Intermediate (WTI) crude rose $1.70, or 1.83 per cent, to $94.73 a barrel.
Brent has climbed about 25 per cent since early August as hopes of a permanent resolution to the six-month-old US-Iran conflict have faded and fighting has intensified across the region.
Houthi attacks raise fresh supply concerns
The latest rise in oil prices follows attacks by Iran-backed Houthis on Saudi energy facilities this week. The strikes set some oil installations ablaze and raised fears that the conflict could expand further into the world’s key oil-producing region.
The attacks could also threaten crude shipments through the Red Sea, which has emerged as an important alternative route to the Strait of Hormuz.
Oil flows through the Strait of Hormuz have already been severely disrupted since the Iran war began on February 28.
The latest developments have therefore raised concerns about both crude production and transportation, putting further upward pressure on prices.
Oil flows through Hormuz plunge
The scale of the disruption can be seen in the sharp decline in oil flows through the Strait of Hormuz.
More from BusinessAround 8 million to 9 million barrels per day (bpd) passed through the strait in the week before fighting resumed on August 30, according to Claudio Galimberti, chief economist at Rystad Energy. That was roughly twice the volume recorded in the previous week.
More recently, however, flows through the crucial waterway have fallen below 2 million bpd.
The Strait of Hormuz is one of the world’s most important oil chokepoints, connecting producers in the Gulf with international markets. A sustained reduction in flows could tighten global supplies, particularly if disruptions persist.
Banks raise oil price forecasts
The latest escalation has prompted several major banks to raise their forecasts for crude prices.
Goldman Sachs, Bank of America and HSBC are among the financial institutions that have increased their oil-price projections in recent days as the risk of prolonged supply disruptions grows.
The concerns come despite higher production from some non-OPEC producers, including the United States, Canada and Guyana.
The International Energy Agency said last month that it expected global oil supply to fall by 4.3 million bpd this year, or about 4 per cent.
Why $100 matters
The move above $100 is significant for global energy markets because crude prices at that level can add to inflationary pressures and raise costs for consumers and businesses.
Higher oil prices increase the cost of fuel, transport and production. For oil-importing economies, they can also widen import bills and put pressure on currencies and trade balances.
The impact will depend largely on how long the disruption lasts. If attacks remain contained, prices could ease as traders reassess the supply risk. But a wider conflict involving major oil producers or key shipping routes could keep crude prices elevated.
