Oil price breaks $100 as US-Iran conflict deepens

BRENT crude prices climbed above $100 per barrel on Wednesday for the first time in nearly two months as escalating hostilities between the United States and Iran heightened fears of prolonged disruptions to global oil supplies.

The international benchmark rose 2.25 percent in early European trading to $100.12 per barrel, its highest level since July 24, before easing slightly to around $99.89. US West Texas Intermediate crude also advanced, gaining about 1.8 percent to $94.67 and approaching the $95 mark.

The latest rally followed a fresh escalation in the US-Iran conflict, with American forces destroying 5 Iranian crude oil carriers and Iran retaliating with missile attacks against US-linked targets in the region.

The US Central Command said its forces destroyed 4 Iranian oil carriers, including M/T Kaviz, M/T Charminar, M/T Horizon 1 and M/T Riesco, in the Gulf of Oman, while a fifth, M/T Derya, was struck near Iran’s Kharg Island.

Washington said the attacks were carried out in response to the Islamic Revolutionary Guard Corps targeting a US Navy warship with ballistic missiles.

The latest strikes followed the destruction of three other oil tankers over the weekend, marking a sharp escalation in attacks on vessels linked to Iran’s oil trade.

Iran subsequently launched ballistic missiles towards Jordan. Jordan’s armed forces said 20 missiles were fired from Iranian territory, with 18 intercepted and destroyed, while the remaining two landed in unpopulated areas. No casualties were reported.

Iran’s Islamic Revolutionary Guard Corps claimed it had struck Jordan’s Al-Azraq Air Base and targeted US vessels and oil tankers in retaliation, although the claims could not be independently verified.

The conflict has also widened beyond direct US-Iran confrontations, with Yemen-based Houthi forces attacking energy infrastructure in Saudi Arabia.

Saudi Arabia’s Ministry of Energy confirmed fires at several locations following Tuesday’s attacks, saying specialised teams were working to contain the fires and assess the damage.

The attacks have added to concerns over the security of energy infrastructure and shipping routes across the Middle East, increasing the risk premium embedded in crude prices.

“Recent developments only reinforce the view that we’re still some way from a restart in talks. In the meantime, the market is likely to continue to price in a sizeable risk premium,” said ING commodities strategists, Warren Patterson and Ewa Manthey.

The latest surge also comes as the oil market grapples with growing disruptions to the so-called shadow fleet used to transport Iranian and Russian crude.

Analysts say the continued destruction or disruption of oil tankers, combined with attacks on energy facilities, could tighten physical crude and refined-product markets if the conflict persists.

The prospect of renewed US-Iran negotiations has also weakened, with the latest military exchanges reducing expectations of an imminent diplomatic resolution.

For oil-consuming economies, a sustained move above $100 could intensify inflationary pressures by raising fuel, transport and production costs. For major oil exporters such as Nigeria, however, higher crude prices could provide stronger government and foreign-exchange revenues, depending on production levels and the extent of supply disruptions.

Market participants will now be watching US inventory data for further clues about underlying demand and supply conditions as geopolitical risks increasingly drive price movements.

With the conflict showing few signs of de-escalation, traders are increasingly pricing in the possibility that crude could remain above the $100 threshold if attacks on oil infrastructure and shipping continue.