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

Brent crude oil futures surged past $100 a barrel on Wednesday, reaching a six-week high amid escalating tensions in the Middle East. The benchmark crude futures climbed $2.01, or 2.05%, to $99.93 a barrel by 0802 GMT after touching $100.19 earlier. Meanwhile, U.S. West Texas Intermediate crude rose $1.49, or 1.60%, to $94.52 a barrel.

Brent prices have climbed by a quarter since early last month as hopes of a permanent resolution to the six-month-old U.S.-Iran conflict waned. Since the Iran war began on February 28, Brent crude prices peaked at $126.41 a barrel on April 30.

Recent attacks by Iran-backed Houthis on Saudi energy facilities have exacerbated concerns over potential disruptions to oil flows from the region, with a significant expansion of the conflict looming. The attacks have set oil installations ablaze and threatened crude shipments via the Red Sea, serving as a crucial alternative route to the Strait of Hormuz, where oil flows have been curtailed since February 28. This has raised the prospect of supply risks mounting in the market.

Economists warn that the market participants are pricing in a prolonged conflict in the Middle East, along with the risk of oil disruptions caused by military strikes. Banks such as Goldman Sachs, Bank of America, and HSBC have raised their crude price forecasts in recent days. While non-OPEC oil producers have ramped up output, the International Energy Agency expects global oil supply to fall by 4.3 million bpd this year, or about 4%.