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From Adanna Nnamani, Abuja
Global oil prices have climbed above $100 per barrel as escalating tensions in the Middle East raise concerns over disruptions to crude supplies and shipping routes in the region.
Brent crude, the international benchmark, rose to $102.50 per barrel, gaining $1.38 compared with Wednesday, while US West Texas Intermediate (WTI) traded $1.51 higher at $97.58 per barrel as of the time of filing this report.
The latest increase, according to Nairametrics, followed an Iranian attack on 10 ships near the Strait of Hormuz after the United States sank five Iranian oil tankers, in what appears to be the biggest wave of attacks on shipping by both sides since the start of the six-month-old war.
The crude prices were heading for their biggest daily percentage gains since September 1, while Brent has surged as high as $126.41 per barrel, a peak reached on April 30, following the escalation of the US-Iran war on February 28.
The latest movement has increased market concerns over how long the Middle East crisis could continue to affect global oil supplies.
Analysts said the return of Brent above $100 showed that the market was increasingly pricing in a prolonged conflict and the risk of further disruptions to oil flows from the region.
Ole Hansen, head of commodity strategy at Saxo Bank, said the move above $100 reflected changing expectations about the duration of the crisis.
“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,” Hansen said.
Senior climate and commodities economist at Capital Economics, Hammad Hussain, said market participants appeared to be preparing for a more prolonged conflict and the possibility that further military strikes could disrupt oil flows.
“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,” Hussain said.
He identified the impact of the latest attacks on tanker movements as a major risk to the oil market.
“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,” he said.
The Strait of Hormuz has become a major focus for energy markets as crude flows through the strategic waterway have been severely curtailed by the conflict.
According to Rystad Energy’s Chief Economist, Claudio Galimberti, about eight million to nine million barrels per day flowed through the Strait of Hormuz in the week before hostilities between the US and Iran resumed on August 30.
The volume was twice the previous week’s level. More recently, however, flows have fallen below two million barrels per day.
The sharp decline has underscored the sensitivity of global oil markets to developments around the Strait of Hormuz and other major shipping routes.
The conflict has also spread beyond the immediate waters around the strait, with US forces hitting multiple Iranian oil tankers, while Iran targeted a US base in Jordan and attacked ships.
Yemen’s Iran-backed Houthi group has also attacked four cities in southern Saudi Arabia, including targets linked to the country’s state-owned oil company, raising concerns over energy infrastructure and crude shipments.
The attacks threaten crude shipments through the Red Sea, which has served as a key alternative route to the Strait of Hormuz.
Oil prices had earlier moved closer to $100 per barrel as Iran continued striking US Gulf allies, with Brent crude rising to $96.98 per barrel while WTI traded 21 cents higher at $91.22 per barrel.
Kuwait’s armed forces also said the country was facing “ongoing Iranian aggression” as its air defences engaged missiles and drones.
The latest rise above $100 represents a further increase in oil prices as the conflict continues to raise concerns over crude supplies, shipping routes and the duration of
