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Brent tops $101, hits highest since May as Gulf fighting escalates
Crude oil prices jumped more than 3% on Wednesday as fighting between the United States and Iran in the Gulf intensified, fueling investor concerns over declining energy exports through the Strait of Hormuz.
In trading, Brent crude futures rose 3.4% to settle at $101.21 a barrel, the global benchmark’s highest closing level since May 22.
US West Texas Intermediate crude futures also climbed 3.3% to settle at $96.05 a barrel.
Escalation continues
The US military destroyed five Iranian crude oil tankers on Tuesday in retaliation for attempts to target a US warship.
US Central Command said the American warship successfully evaded the Iranian attack and that none of its crew members were injured.
Fuel prices are reaching fresh record highs in the United States as the war in the Middle East escalates again.
Gasoline prices reached a record $4.15 a gallon over the Labor Day holiday on Monday. Analysts expect diesel prices to reach $6 a gallon for the first time ever in the coming days.
Goldman Sachs’ base case continues to assume that Persian Gulf exports will gradually recover as producers adapt to the disruptions, including by using alternative shipping routes and eventually adding new pipeline capacity.
However, the latest escalation has increased the likelihood of a more bullish scenario for oil prices in which exports fail to recover over the coming months because of attacks on oil tankers, according to Struyven.
Oil supply concerns intensify
The United States and Iran largely avoided fighting for about a month following a wave of violence in July, while Washington shifted toward applying economic pressure on Tehran.
However, fighting has resumed as Iran continues to attack commercial shipping in and around the Strait of Hormuz.
The renewed escalation comes as Brent crude has climbed above $100 a barrel for the first time since July, with intensifying attacks by the United States and Iran on oil tankers threatening to further disrupt energy supplies from the region.
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