Oil prices hold near six-week highs on US-Iran attacks

Oil prices crept nearer to six-week peaks on Monday, edging toward $100 per barrel, as ongoing tit-for-tat attacks between the U.S. and Iran disrupted crude oil flows in the Middle East. Brent crude futures surged $1.19, or 1.2%, to $97.47 a barrel, having briefly reached a six-week high of $97.93 earlier in the day. U.S. West Texas Intermediate crude also neared a six-week high at $92.26 a barrel, up 78 cents.

Saudi Aramco's Jazan oil refinery in Saudi Arabia faced an attack on Monday, with the extent of the damage yet to be determined by the Financial Times, citing sources familiar with the incident. In Saudi Arabia, the Saudi Aramco's Jazan oil refinery was targeted, and the extent of the damage is currently being assessed.

Monday's price gains built upon a 8% increase for Brent last week, while WTI rose nearly 10% after the U.S. and Iran resumed their attacks. On Saturday, U.S. forces targeted three Iranian oil tankers, including one near Kharg Island, an oil export hub. In retaliation, Iran's Islamic Revolutionary Guard Corps claimed responsibility for striking three oil tankers in unauthorized routes, as well as three vessels linked to the U.S. in other areas. The attacks marked a significant escalation, according to maritime intelligence firm Marisks.

Commercial tankers are now being deliberately targeted as part of reciprocal economic pressure, blurring the line between military conflict and commercial shipping. If tanker traffic declines substantially, the market could anticipate a substantial supply shock, Priyanka Sachdeva, head of market insights at Phillip Nova, warned. Goldman Sachs suggested oil prices could soar to $120 per barrel if attacks on shipping intensify.

OPEC+ decided to maintain its oil output policy for October at a meeting on Sunday, as they need to agree on new quotas before determining their next steps in adjusting production. Iran's Secretary of the Supreme National Security Council, Mohsen Rezaei, hinted at the possibility of announcing a restricted zone outside the Strait of Hormuz in the coming days.