Brent crude rises above $100 a barrel as Middle East conflict intensifies

Brent crude oil prices surpassed $100 a barrel on Wednesday, marking a six-week high, due to escalating conflict in the Middle East. The benchmark futures climbed $2.01, or 2.05%, reaching $99.93 a barrel by 0802 GMT. West Texas Intermediate crude also increased, up $1.49, or 1.60%, to $94.52 a barrel. Brent prices have risen by a quarter since early last month as hopes diminish for a lasting solution to the six-month-long US-Iran conflict.

Since the war began on February 28, Brent reached a peak of $126.41 a barrel on April 30. This week, attacks by Houthis on Saudi energy facilities have set oil installations ablaze, potentially triggering a significant escalation of the conflict. These attacks also endanger crude shipments through the Red Sea, a vital alternative route to the Strait of Hormuz, where oil flows have been severely restricted since the conflict's inception.

Market participants appear to be anticipating a more prolonged Middle East conflict and the risk of disruptions in oil supply from the region, according to Hamad Hussain, senior climate and commodities economist at Capital Economics. The main concern is whether recent attacks on oil tankers will lead to fewer ship-to-ship transfers in the Gulf of Oman, which have been crucial in supplying oil to global markets and maintaining price stability.

Several banks, including Goldman Sachs, Bank of America, and HSBC, have recently revised their crude price forecasts upwards. Despite increased output from non-Opec producers like the United States, Canada, and Guyana, the International Energy Agency forecasts a global oil supply decline of 4.3 million bpd, or approximately 4%, this year.