Brent Holds Above $100 as US-Iran Tanker Attacks Fuel Supply Fears
NEW DELHI, INDIA — WEB DESK: Brent crude remained above the psychologically important $100-a-barrel level on Thursday as escalating attacks on shipping involving Iran and the United States heightened fears of deeper disruptions to global oil supplies.
Brent crude futures were down 0.7% at $100.50 a barrel by 0619 GMT, while US West Texas Intermediate (WTI) crude slipped 0.5% to $95.58, according to Reuters. Earlier in the session, Brent had traded above $101.
Despite Thursday’s modest pullback, oil remains sharply elevated after renewed fighting around one of the world’s most important energy corridors.
Brent has risen nearly 30% from lows reached in early August, reflecting renewed geopolitical risk after attempts to secure a lasting halt to US-Iran attacks failed and hostilities resumed later that month.
Iran Says It Attacked 10 Ships
The immediate market pressure follows a dramatic escalation at sea.
Iran said on Wednesday that it had attacked 10 ships near the Strait of Hormuz after the United States sank five Iranian oil tankers.
Iran’s Islamic Revolutionary Guard Corps also warned that it would escalate its response if further attacks were carried out against Iranian targets.
The United States and Iran have now conducted their largest wave of attacks against shipping since their conflict began six months ago.
The escalation has intensified concerns that commercial vessels carrying oil and other commodities could face increasingly dangerous conditions across Gulf shipping routes.
Brent Crossed $100 for First Time Since July
Brent crossed $100 on Wednesday for the first time since July, highlighting how quickly geopolitical risk has returned to the oil market.
The international benchmark settled Wednesday at $101.21 a barrel, while US crude finished at $96.05, according to Associated Press market data.
Prices eased slightly on Thursday but remained firmly around the triple-digit threshold.
That level matters because prolonged crude prices above $100 can feed through into fuel, transportation, manufacturing and food costs, potentially adding to inflationary pressure worldwide.
Strait of Hormuz Remains Key Risk
At the centre of the market’s concerns is the Strait of Hormuz, the narrow waterway connecting the Persian Gulf with the Gulf of Oman.
Before the current war, approximately one-fifth of global oil and gas supplies passed through the Strait, making it one of the world’s most strategically important energy corridors.
Oil flows through the waterway remain significantly below their pre-war levels.
Any further deterioration in shipping conditions could therefore tighten supplies from Gulf producers and increase transportation, insurance and security costs for energy cargoes.
The market is particularly sensitive because alternative export routes have limited capacity to fully replace Hormuz.
Tanker Attacks Raise Global Supply Risk
The latest escalation is not limited to military rhetoric.
A tanker carrying around 2 million barrels of Iraqi fuel oil caught fire after a drone strike, while other merchant vessels were reported hit across the Gulf and Gulf of Oman during the latest wave of attacks.
The incidents have reinforced concerns that commercial shipping is becoming increasingly exposed to the conflict.
For oil traders, the risk is not simply whether production facilities are damaged.
Even when oil remains available, threats to vessels can disrupt shipping schedules, raise insurance premiums, delay deliveries and make some operators reluctant to enter high-risk waters.
Houthi Attacks Put Red Sea Route Under Pressure
A second major concern is emerging away from Hormuz.
Iran-aligned Houthi forces have intensified attacks on Saudi Arabia, including strikes affecting oil facilities, putting additional pressure on another important regional energy-export route.
That development is particularly significant because alternative Gulf export channels become more important when traffic through Hormuz is constrained.
Threats to shipping through or near the Red Sea therefore complicate efforts to reroute Gulf energy exports.
The simultaneous pressure on Hormuz and Red Sea-linked routes is one reason traders continue to price a substantial geopolitical premium into crude.
China Could Determine Next Move in Oil Prices
While Middle East supply risks are driving the immediate rally, analysts say China’s crude demand could help determine whether Brent remains above $100 or climbs further.
China, the world’s largest crude importer, has increased purchases in recent weeks following months of relatively subdued demand.
ING analysts said stronger Chinese buying has supported the physical crude market.
If Chinese demand continues recovering while Middle Eastern supplies remain constrained, the combination could intensify upward pressure on prices.
A decline in Chinese imports, however, could reduce some of the market tightness and limit the rally.
Physical Oil Market Also Above $100
The strength is not confined to futures markets.
Reuters reported that dated Brent, the physical benchmark used to price roughly two-thirds of global crude supply, has remained above $100 since September 3, citing LSEG data.
That indicates the rally is being reflected in physical oil markets as well as speculative futures trading.
The distinction is significant because sustained strength in physical crude can eventually translate into higher refinery feedstock costs and, depending on local taxes, subsidies and currency movements, more expensive petroleum products for consumers.
Oil Shock Spreads Across Global Markets
The renewed oil surge is already affecting financial markets beyond energy.
Rising crude prices have added to inflation concerns and contributed to higher global bond yields. Benchmark 10-year US Treasury yields reached their highest levels since 2023 as investors assessed the inflationary implications of another energy shock.
Asian equity markets also weakened Thursday as investors responded to oil remaining above $100.
Energy companies have benefited from higher crude prices, but airlines, transportation companies, retailers and other fuel-sensitive industries face the prospect of higher operating costs.
Higher Oil Could Increase Global Inflation Pressure
A prolonged period of Brent above $100 could have broader economic consequences.
Crude oil affects not only petrol and diesel prices but also transportation, aviation, agriculture, petrochemicals, manufacturing and supply-chain costs.
Higher energy costs can therefore feed into consumer prices even in economies that are geographically distant from the Middle East.
The inflation implications are particularly sensitive as major central banks assess interest-rate policy.
Oil’s renewed rise is already contributing to expectations that policymakers may have to remain cautious about inflation even as economic growth faces geopolitical pressure.
What Happens Next?
The immediate direction of oil prices is likely to depend on three factors: the intensity of US-Iran maritime attacks, the security of Strait of Hormuz shipping and the strength of Chinese crude demand.
For now, the risk premium remains firmly embedded in the market.
Brent has risen almost 30% from its early-August lows and remains above $100 despite Thursday’s modest decline.
A reduction in hostilities or improvement in Hormuz shipping could ease prices.
Further tanker attacks, damage to energy infrastructure or disruption of alternative Gulf export routes could push the market in the opposite direction.
The latest developments therefore leave global energy markets facing a volatile combination of constrained Gulf oil flows, escalating maritime conflict and renewed uncertainty over the security of two of the Middle East’s most important shipping corridors.
