Brent Oil Prices Remain Above $100 Amid Iran-US Tensions and Potential Supply Disruptions
Oil prices continued their upward trajectory on Thursday, with Brent crude remaining above $100 a barrel amid escalating tensions between Iran and the United States. Brent crude futures increased by 0.1% to $101.34 a barrel, while US West Texas Intermediate (WTI) crude rose 0.5% to $96.55. The previous day, Brent settled at $101.21, marking a 3.4% increase, while WTI closed at $96.05, both reaching their highest levels since May 22.
The surge in prices follows Iran’s announcement of attacks on 10 ships near the Strait of Hormuz, coupled with the US sinking five Iranian oil tankers. Iran’s Revolutionary Guard Corps has indicated it will escalate its response to further assaults, raising concerns about potential disruptions to Middle East crude supplies.
Strait of Hormuz in Focus
The Strait of Hormuz remains a critical area for global energy markets, with nearly one-fifth of the world’s oil supply passing through the waterway before the onset of conflict. Currently, oil and gas flows through the strait are significantly below pre-war levels. Prices had largely remained under $100 a barrel since late May, as traders anticipated the conflict would remain contained. A temporary agreement between the US and Iran in June to halt attacks had provided some relief, although no lasting peace deal was established.
Brent crude has fluctuated since the war began on February 28, reaching a peak of $126.41 a barrel on April 30. It briefly crossed the $100 mark again in late July before dropping below that threshold. The International Energy Agency has projected a decline in global oil supply by 4.3 million barrels per day this year, or about 4%, further intensifying concerns over supply constraints.
Fuel Prices Add to Pressure
The physical crude market is already reflecting the impact of these supply disruptions. Dated Brent, a benchmark for pricing approximately two-thirds of global oil supplies, has remained above $100 a barrel since September 3, according to LSEG data. Refined fuel prices have also surged, with US gasoline averaging around $4.22 a gallon and diesel prices nearing $6 a gallon.
Rising crude prices are likely to increase the costs of gasoline, diesel, and jet fuel, which could elevate transportation expenses and subsequently drive up prices for goods reliant on road, air, or sea transport. Asian stocks fell on Thursday as oil prices remained elevated, raising investor concerns ahead of upcoming US inflation data that may impact the Federal Reserve’s monetary policy.
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